Dollar in check pending rate clarity

The US dollar inched off two-week lows last Friday but was on track for its biggest weekly drop in a month, as investors contended with tariff negotiations before an Aug 1 deadline, while looking ahead to central bank meetings this week.

- ANKUR BANERJEE

Both the US Federal Reserve and the Bank of Japan are expected to hold rates, but traders will focus on subsequent comments to gauge the timing of the next move.

The prospect of rate hikes by the BoJ improved after a trade deal struck with the United States last week lowered tariffs to 15% on auto imports from Japan, said Carol Kong, currency strategist at Commonwealth Bank of Australia.

But a near-term rate hike is hardly a done deal with the timing dependent on whether the economy can withstand the impact of US tariffs, four sources familiar with the thinking of BoJ policymakers told Reuters.