Dollar steady in holiday thinned trade

The dollar was little changed against the other major currencies in holiday thinned trade on Monday, as recent soft U.S. economic data fuelled concerns over the outlook for the economic recovery.

Dollar little changed in thin trade

USD/JPY edged up 0.09% to 101.92, pulling back from lows of 101.39, the weakest since February 6.
The dollar remained under pressure after data on Friday showing that U.S. factory output fell unexpectedly in January clouded the outlook for the economic recovery. The data prompted some investors to wonder whether the Federal Reserve will slow the pace of reductions to its asset-buying stimulus program.
Trade volumes were expected to remain thin on Monday, with U.S. markets shut for the President’s Day holiday.
The safe haven yen touched session highs earlier after official data on Monday showed that Japan’s gross domestic product expanded 0.3% in the final three months of 2013 and grew 1.0% on a year-over-year basis.
Market expectations had been for quarterly growth of 0.7% and an annual increase of 2.8%.
EUR/USD touched highs of 1.3724, the strongest since January 24 and was last up 0.08% to 1.3704.
Demand for the euro continued to be underpinned as Friday’s better-than-expected euro zone fourth quarter growth data eased concerns that the European Central Bank could tighten monetary policy at its next meeting.
Also supporting the euro, ECB governing council member Ewald Nowotny said Monday the banks bond buying program is “not that relevant” anymore, because of the improved economic situation.
Elsewhere, the pound eased back from four-year highs against the dollar, with GBP/USD slipping 0.12% to 1.6728. The pair rose to highs of 1.6823 earlier, the strongest level since November 2009.
Demand for sterling continued to be underpinned after the Bank of England revised up its forecast for growth in 2014 in last week’s quarterly inflation report, and indicated that it may raise rates as soon as next year.
The dollar slid against the Swiss franc, with USD/CHF edging down 0.13% to 0.8916.
The Australian dollar slipped lower, with AUD/USD dipping 0.09% to 0.9026, while NZD/USD was down 0.14% to 0.8356.
In New Zealand, data on Monday showed that retail sales rose 0.7% in the final three months of 2013 and were up 1.2% from a year earlier. Market expectations had been for a quarterly gain of 1.2% and an annual increase of 1.6%.
The U.S. dollar was lower against the Canadian dollar, with USD/CAD edging down 0.09% to 1.0968.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.01% to 80.16.