A bruised dollar took respite on Monday after suffering its worst weekly drop of the year, as traders waited on economic data and policy decisions before selling it down any further.

The euro , which jumped 2.4% last week to a 16-month high, held just below that peak at $1.1223. The yen , also up 2.4% last week, held at 138.56 per dollar.

Chinese growth data landed a little above low expectations on Monday, but without sparking much currency market response as traders had already priced in a sluggish quarter and are waiting to see if the government steps up stimulus to promote spending.

The Australian and New Zealand dollars pulled back slightly, with the Aussie last at $0.6821 - off last week's peak of $0.6895 - and the kiwi down 0.2% at $0.6355 after hitting a five-month high of $0.6412 on Friday.

Last week's dollar slide began with yen buying, as investors unwound yen-funded positions in emerging markets, but extended sharply after softer-than-expected U.S. inflation data leant support to wagers that U.S. interest rates will soon peak.

Hikes are expected from the Federal Reserve and European Central Bank next week, but beyond that market pricing implies the Fed will likely stop, before cuts next year, while in Europe another hike probably beckons.

The U.S. dollar index dropped 2.2% last week, its sharpest one-week fall since November, and was steady at 99.936 in the Asia session.

Sharp gains in the yen have slowed as traders weigh whether the ultra-dovish Bank of Japan is really likely to make any shifts at its policy meeting next week, given rhetoric suggests they are in no hurry.

Source : Reuters