Dollar hits one-month high

The dollar rose to a one-month high above 108.00 yen on Monday, riding on momentum gained from better-than-expected US data on capital spending and home sales late last week that lifted some of the gloom over the economy.
Hopes have risen for stability in the battered US housing market after Congress passed a rescue package that was expected to be signed soon by President George W. Bush, sparking a rebound in the shares of US banks and mortgage financing companies over the last two weeks.
The package will set up a $300 billion fund to help hundreds of thousands of troubled homeowners and end the deepest housing slump since the Great Depression. The sharp retreat in oil prices from record highs has also given investors hope that the global economy can muddle through the US economic downturn stemming from the ongoing slide in housing prices.
Analysts are looking to two key US economic reports later this week, including the monthly payrolls data on Friday, to see whether the dollar can build on its recovery from a record low struck against the euro earlier in the month.
"The dollar's recent fortunes have been dependent to a large degree on economic indicators, and a weak reading in US payrolls could turn the tide against the dollar again," said Masaki Fukui, senior market economist at Mizuho Corporate Bank.
The dollar was little changed from late US trade on Friday at 107.80 yen after hitting 108.08 yen on trading platform EBS. Japanese exporters, who are seen to have orders lined up to sell the dollar above 108 yen, have also moved into focus. The euro was nearly flat against the dollar at $1.5715 European corporate earnings due this week may provide some direction for the single currency, traders said.
The yen held near a record low against the euro near 170 yen. A recovery in global stock markets has taken a toll on the low-yielding yen, as investors have favoured carry trades - selling the yen to buy higher-yielding currencies and assets.
Japan's Nikkei share average edged up 0.3 percent on Monday after having racked up its biggest weekly gain in five months last week, and other Asian equity markets were mostly higher on the day.
Before the jobs figures, second quarter US GDP will be released on Thursday that may also test the dollar's resilience. The economy is forecast to have grown at an annualised pace of 2.0 percent, thanks in part to the stimulus from tax rebate checks sent to households. But the payrolls report is expected to show a loss of 75,000 jobs in July, in what would be the seventh straight month of decrease.
"Payrolls will be the next potential turning point for the dollar. Downbeat jobs results would offset any positive aspects of the previous day's second quarter US GDP, which is likely to show decent growth thanks to tax rebates," said Tomoko Fujii, head of economics and strategy at Bank of America.
"But weak employment numbers may lead to talk that tax rebates were premature." The Australian dollar dipped 0.1 percent to $0.9554 in response to news that Australia and New Zealand Banking Group Australia's third-biggest lender, issued a profit warning on Monday.