The dollar sat tight on Monday, after it slipped on US jobs figures that, although healthy, did not point to interest rates rising at a faster pace as some investors had hoped. The currency's failure to gain on the upbeat employment data suggested to dollar bears that it was poised to weaken, while others saw its fall as a position adjustment that had set the stage for a rebound. "The dollar is likely to gradually edge up as the market eventually comes to realise the US economy is doing quite well," said Yukihiro Shimoyamada, forex dealer at UFJ Bank.
The euro was little changed at $1.3230 after rising around 1 percent on Friday.
The dollar was also flat at 104.80 yen.
"The market doesn't know what to trade on," said Fumihiko Kawano, forex manager at Nomura Securities.
"The market may pay attention to rising US interest rates and buy the dollar in the end, but it could shift focus back to the US current account deficit. We can't tell at the moment."
The yen's rise was seen capped by a healthy appetite for foreign securities - particularly US assets - from Japanese investors ahead of the end of the blanket state guarantee on deposits at the end of March.
But that was seen offsetting the usual yen-buying that occurs when Japanese companies repatriate profits ahead of the March 31 book-closing.
The yen showed a muted response to data showing capital spending by Japanese firms slowed in the final quarter of 2004.
Meanwhile, the New Zealand dollar gained on the back of the US dollar's retreat, rising to a fresh 22-year high of 73.67 US cents in offshore trading, before falling back to around 73.30 cents.
Data on Friday showed US non-farm payrolls rose by 262,000 in February, well above a Reuters forecast for 220,000 and the biggest gain in four months.
"The jobs data was very strong, but some had hoped for an even more robust figure, so there was disappointment somewhat," said Kikuko Takeda, market economist at Bank of Tokyo-Mitsubishi.
"There was nothing in the jobs data to imply that the Fed would accelerate its tightening speed, and it seemed to confirm that the Fed would keep raising rates steadily by 25 basis points through the year," she said.
The Federal Reserve has raised its target federal funds rate by a quarter percentage point at six successive meetings since last June to take it to 2.5 percent.
Fed policy makers will next meet on March 22, when another quarter point increase is expected.
Fed governor Ben Bernanke will comment on Tuesday on the economic outlook, while Fed Chairman Alan Greenspan will speak on Thursday and Friday.
Traders brushed aside comments by China's foreign exchange chief, Guo Shuqing, who said that a revaluation of the yuan would be unfavourable to both the domestic and global economies, although the country would eventually let the currency float freely. He did not specify a timeframe.
The United States has complained that yuan's peg of 8.28 to the dollar is too low and gives China an unfair trade advantage. China-related comments had swayed currency markets sharply late last year through January.
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