LONDON (AFP) — The dollar was slightly firmer Monday in quiet trade, recovering some of the ground lost last week after a series of weak US economic data, dealers said.
They said that with US markets closed for a public holiday Monday, there was little incentive to take aggressive positions, especially with more US figures to come as players try to get a line on the economic outlook.
The dollar fell last week after US Federal Reserve chairman Ben Bernanke kept the door open for further cuts in interest rates due to continuing signs of trouble in the US economy.
It recovered some of these losses but dealers said they were doubtful whether the US unit would be able to hold onto those gains amid persistent concerns the US economy is at risk of recession.
"Weak US economic reports (last week) served to reverse the more optimistic attitude towards the economy which had been triggered by stronger-than-expected retail sales earlier," noted NAB Capital strategist John Kyriakopoulos.
"We expect the dollar to remain under pressure and to be unable to post gains on a sustainable basis in the coming weeks as the slowing economy means that US fundamental data will come in much weaker in the first quarter," said analyst Gavin Friend at Commerzbank.
In European trade Monday, the euro was at 1.4654 dollars, up from early lows of 1.4636 dollars but down from 1.4683 in New York late Friday.
Against the Japanese currency, the dollar rose to 108.13 yen from 107.72.
Dealers said sentiment on the dollar was hit by Bernanke's comments last week on the outlook.
Bernanke said there were strong "downside risks" to US economic growth and that the Fed was ready to respond as necessary -- which was seen as a hint that further interest rates cuts might be in the pipeline.
"There is more uncertainty now on how deep the economic slowdown will be. The inclination is to sell the dollar as the Fed lowers interest rates," said David Cohen, a director of Asian economic forecasting at Action Economics.
The pound sterling was also a feature after the British government announced the nationalisation of troubled mortgage lender Northern Rock, which has had to be baled out with billions of dollars in taxpayers' money.
The pound fell to a two-week low of 0.7521 against the euro and a one-week low against the dollar on the news, which increased concerns about the prospects and management of the British UK economy.
"The pound was sold ... on the back of the ... absorption of (Sunday's) Northern Rock nationalisation announcement," said Robert Howard, analyst at Thomson IFR Markets.
In Europe on Monday, the euro changed hands at 1.4654 dollars against 1.4683 late on Friday, at 158.45 yen (158.18), 0.7512 pounds (0.7484) and 1.6152 Swiss francs (1.6049).
The dollar stood at 108.13 yen (107.72) and 1.1022 Swiss francs (1.0927).
The pound was at 1.9512 dollars (1.9612).
On the London Bullion Market, the price of gold dropped to 903.25 dollars an ounce from 912.50 dollars late on Friday.
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