By William L. Watts and Michael Kitchen, MarketWatch
FRANKFURT (MarketWatch) -- The U.S. dollar gained ground versus major rivals Monday, paring some of its Friday losses as investors weighed the potential for the Federal Reserve to wrap up its bond-buying program by the end of the year.
The ICE dollar index (DXY), which compares the greenback to a basket of six rival currencies, traded at 80.575, up from 80.440 late Friday.
"It is hard to ignore the solid performance of the dollar over recent trading sessions, helped by a more hawkish [Federal Open Market Committee] and comparatively respectable growth. Short-term, it would not be surprising if this dollar demand did not continue," wrote strategists at FxPro in London.
The dollar had lost ground at the end of last week as employment data failed to convince the market that the Fed would begin tightening policy soon.
Still, Friday's losses didn't undo all of the gains made after minutes from the Fed's most recent meeting showed some policy makers were considering an end to the U.S. central bank's bond-buying program by the end of the year.
Crédit Agricole chief forex strategist Mitul Kotecha said the possible beginning of the end for the Fed's quantitative easing (QE) would remain the top focus for the week ahead.
"A light data week will give little directional impetus to the [dollar]... Instead the [dollar] will take its cue from various Fed speakers who will likely provide more elaboration on their views on an eventual exit from QE," he said.
The dollar "is likely to remain firm in the short term, although we would be wary of extrapolating trends based on early-year moves," Kotecha said.
The euro (EURUSD), meanwhile, edged down from its levels at the end of the previous week, changing hands at $1.3035, off from late Friday's $1.3082.
The euro's moves came ahead of a European Central Bank meeting later in the week, as well as expected debt issuance from Germany, Italy and Spain, among others.
The Japanese yen held steady against the U.S. currency, but gained against a weaker euro.
The dollar (USDJPY) bought Yen87.88, off its highs of the day and just below Friday's Yen88.13 level, with the Nikkei business daily citing Japanese exporters' yen buying to take profit on the U.S. currency's recent gains.
The euro (EURJPY) fell to Yen114.56 from Yen115.29 at the end of the previous week.
Among other major currency pairs, the British pound (GBPUSD) slipped to $1.6066 from Friday's $1.6079, and the Australian dollar (AUDUSD) erased earlier weakness to trade at $1.0500, up from $1.0483.
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