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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