FOREX-Euro supported ahead of Lagarde speech, rand bounces

* Currencies little moved with Tokyo on holiday
* Euro well supported ahead of ECB Lagarde speech
* Dollar index pinned near a three-month trough
* South African rand rises as rating dodges junk status

By Wayne Cole
SYDNEY, Nov 4 (Reuters) - Major currencies started the week
quietly with a holiday in Tokyo making for thin trading
conditions and investors waiting to hear the first official
speech from the new head of the European Central Bank later in
the session.
The dollar had tried to rally on Friday after U.S. payrolls
beat expectations, but was undone by a soft manufacturing survey
which left it looking heavy. The euro started the week firm at $1.1168 EUR= as bulls
looked to test the October peak of $1.1179 and the 200-day
moving average at $1.1195.
Against a basket of currencies, the dollar was stuck at
97.218 .DXY having touched a three-month low at 97.107 on
Friday. It was now targeting the August trough of 97.033.
The dollar fared a little better on the yen as safe havens
fell from fashion, edging up to 108.23 JPY= from Friday's low
around 107.87.
Sterling remained well bid at $1.2935 GBP= , after last
month's rally from $1.2200, as investors wagered there was less
risk of a hard Brexit now that an election campaign was
underway.
One of the few movers was the South African rand, which rose
as investors were seemingly relieved that Moody's had only
downgraded the ratings outlook for the country's debt on Friday
and did not cut it to junk as some had feared. The rand was quoted up about 1% at 14.8650 per dollar
ZAR=D3 , recouping a little of sharp losses suffered last week.
The U.S. dollar itself has been under pressure since the
Federal Reserve cut rates last Wednesday and left the door open
to more if needed, while all but ruling out the risk of a
tightening.
"Global policy rates are converging once again at the
bottom. That probably means less volatility among currencies as
interest rate differentials shrink and the likelihood of any
change in policy diminishes," said Marshall Gittler, an analyst
at ACLS Global.
"It's also likely to mean a weaker USD, CAD, AUD and NZD as
these are the currencies with the highest interest rates
currently and therefore the greatest leeway to cut rates. This
is probably why USD and CAD were the big losers last week."
Equally, the main gainers last week were the Swedish SEK=
and Norwegian NOK= currencies as interest rates in both
countries are seen on hold or even rising in coming months.
Central banks in Australia and the UK hold policy meetings
this week and are expected to hold steady, though there is some
speculation the Bank of England might drop its tightening bias.
The new head of the European Central Bank (ECB) Christine
Lagarde gives her first speech in the role later on Monday and
markets assume she will stick with the easy policy script left
by Mario Draghi. There are also at least seven Fed speakers set to speak this
week.
Investors are also hanging on the Sino-U.S. trade talks
after both sides said they had made progress toward a Phase-1
deal which might be signed sometime this month.