The dollar eased off recent peaks on Monday as a broad-based rally sparked by stronger than expected US jobs data on Friday ran out of steam in a holiday-thinned market.
The dollar rose around one percent against the euro and yen on Friday as data showed US employers added 144,000 workers to payrolls in August and weak hiring tallies for the prior months were revised higher.
But the greenback was unable to extend its gains as a US holiday sapped trading volumes and attention focused on Federal Reserve Chairman Alan Greenspan's testimony to the House Budget Committee on Wednesday.
"The market is already convinced US interest rates will rise this month and is now more concerned about what will happen next year," said Kamal Sharma, foreign exchange strategist at Dresdner Kleinwort Wasserstein. "The major event this week is Greenspan."
By 1425 GMT, the dollar was down 0.2 against the euro at $1.2072 and 0.3 percent against the yen at 110.08.
The dollar hit a one-week high against the euro and a 2-1/2 week peak against the yen on Friday as the upbeat US jobs report eased concerns the world's powerhouse economy was slowing and US interest rate rises may be put on hold.
The Federal Reserve has already raised interest rates twice since late June and is expected to raise by another quarter-point to 1.75 percent on September 21, restoring the appeal of US deposits for international investors.
After September, there are two more Federal Reserve policy-setting meetings before the year-end.
"There was a lot of pessimism about the US economic recovery over the last two months but Friday's data certainly improved the outlook for the US growth profile," said Adam Myers, foreign exchange strategist at Societe Generale.
Signs of economic improvement in both Germany and Japan on Monday also prevented the dollar extending its payrolls-inspired rally.
German industry orders rose by three percent in July, three times more than the economists' forecast, led by a rise in demand for German goods from abroad.
Capital spending by Japanese firms, meanwhile, rose 10.7 percent in the second quarter, the highest annual gain since current calculation methods began in 2001.
Comments
Comments are closed.