LONDON: The dollar made a poor start to the week on Monday, with some investors still seeing Friday's weaker than expected U.S. jobs numbers as an excuse to pause after three strong weeks of gains.
The Swiss franc was back on the verge of the central bank's 1.20 franc ceiling versus the euro after another week that highlighted the euro zone's problems.
The fundamental picture remains in favour of further gains for the greenback, with Japan again easing monetary policy and the euro zone economic picture making a strong case for similar action.
But in early deals the dollar was 0.1 percent lower against a basket of currencies, reflecting falls of half a percent and 0.2 percent respectively to 144.08 yen and $1.2471 per euro.
"The dollar has had a good run of late and those who have been short euro dollar for example have just taken this chance (to take stock)," said Geoffrey Yu, a strategist with UBS in London.
"At $1.25, there is already a good deal of quantitative easing baked in to the price of the euro, but I would also say that it is less about how much more the euro can fall than how much the U.S. policy outlook justifies further dollar gains."
Like most major banks, UBS expects the diverging fortunes of the U.S. and European economies to push the dollar consistently higher over the next year. But Yu said he expected the pause in those gains to continue on Monday.
Dealers said a push lower had revealed there were large, so far untaken, bids for the euro at 1.2020 francs.
The Swiss National Bank has successfully kept a lid on the franc's gains for more than three years and says it has not had to intervene to reinforce it for more than two.
With Swiss inflation at zero, the SNB would have a pretty free hand to create new francs to stem any more gains, and dealers and analysts maintain there is as yet little appetite in the market to test its resolve.
"Anyone who thinks they can play around with this is in for a rough time," said one London-based dealer. "There is no sign there will be any give from the SNB at all."
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