The dollar slipped on Monday against the yen and the euro on expectations that US data this week could support the case for interest-rate cuts by the Federal Reserve. The yen gained across the board after the dollar failed to break above a recent high on Friday, prompting some short-term market players to trim their bets on further weakness in the yen, traders said.
Investors were also cautious ahead of US economic data due this week, which is expected to show softer durable goods orders in January and a sharp downward revision to fourth-quarter economic growth figures.
"The dollar lost some support this Monday, but trading volume was much lower than usual," said Brian Taylor, managing director for foreign-exchange trading at M&T Bank in Buffalo, New York. "With all the data coming this week, few participants were out there willing to build large positions."
The dollar declined 0.4 percent to 120.55 yen. The dollar peaked at around 121.63 yen twice last week but failed to break above that level, according to Reuters data. "The dollar's failure to break through some key levels last week is helped the yen a bit," Taylor said.
The euro rose 0.1 percent to $1.3182 after rising to just short of $1.3200 earlier in the session, its highest since early January. Still, the euro slipped against the Japanese currency and was down 0.2 percent at 158.95 yen, short of a record high of 159.63 yen hit last week, according to electronic trading platform EBS.
The dollar was down 0.2 percent against the Swiss franc at 1.2295 francs; earlier it traded at about 1.2288, its lowest level in almost two months, according to Reuters data.
Soft economic data in the United States this week would likely strengthen the argument of those expecting the Federal Reserve to cut the fed funds rate from 5.25 percent this year to shore up a slowing economy.
US durable goods, existing home sales and consumer confidence data are all due on Tuesday, followed by fourth-quarter gross domestic product data and new home sales on Wednesday and a closely watched manufacturing survey from the Institute for Supply Management on Thursday.
A notable gainer on Monday was the New Zealand dollar, which rose to a 14-month high, driven by expectations that the Reserve Bank of New Zealand will keep raising interest rates from a level that is already the highest in the industrialised world. The kiwi dollar was up 0.6 percent to US $0.7100, slightly down from the high of US $0.7123.
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