Dollar Supported By Last Week's US Data; Quiet Trading

NEW YORK (Dow Jones)--The dollar is firming Monday morning in New York as a lack of fresh data or news during a holiday lull allows last week's positive economic report to continue support the greenback in quiet trading. The release of stronger-than-expected employment data Friday, which signaled that the U.S. economy is likely to skirt an outright recession, is keeping market confidence in the greenback inflated Monday - a reaction that was unable to gain momentum Friday when a massive purchase of euros reversed dollar gains versus the single currency. Now, the dollar has reached its highest levels against the yen since mid-August, just before the Federal Reserve cut its benchmark interest rate target. So far, it reached an intraday high of Y117.51. The dollar is likely to remain in current ranges ahead of the release of September inflation data in the producer prices report and September retail sales data, both out Friday. A holiday in Japan, Columbus Day in the U.S., Thanksgiving Day in Canada will keep consistency the theme Monday, as bonds markets remain closed. Early in New York, the euro was at $1.4090, from $1.4139 late Friday, while the dollar was at Y117.49, from Y116.90. The euro was at Y165.54, from Y165.31. The U.K. pound was at $2.0400, from $2.0415, according to EBS. The dollar was quoted at CHF1.1834, from CHF1.1778. The payrolls report Friday "raised concerns about whether the Fed had needed to cut rates (50 basis points) and helped to reduce expectations of another rate cut at the end of this month to 50% from 70%," said analysts at Brown Brothers Harriman & Co. "With sentiment likely to swing further away from a Fed cut in (October), the euro risks a break of the 1.4030 area tested late last week. That would open up a bigger move to 1.3930 support," according to BBH. Europe's response to the rising euro could dominate a meeting of euro zone finance ministers later Monday in Luxembourg. The ministers' main task will be forging a common European stance before the meeting of the Group of Seven leading industrial nations in Washington later this month, said analysts. Markets will look for signs that the finance chiefs want strong medicine, an ECB rate cut or even a coordinated effort to prop up the U.S. dollar. The finance ministers could suggest a G7 statement urging the U.S. to pursue a stronger dollar and calling for China to let the yuan float more freely. Previous G7 statements have stressed only that volatile currency swings and global imbalances are bad for economic growth. However, economists suspect the finance ministers aren't betting the farm on any particular wording and will instead look for a solution closer to home, pressuring the ECB to help ease the euro's rise. European Central Bank President Jean-Claude Trichet, a champion of the central bank's independence, will attend Monday's meeting. In Asia, four monetary policy meetings are scheduled this week: Monetary Authority of Singapore, likely to maintain a tightening bias; Bank Indonesia, likely to maintain rates; Bank of Korea, which could pause after a surprise hike on Aug. 9; and Bank of Thailand, which might cut rates by 25 basis points, analysts suggest. Currency analysts also note the top performance of the Australian dollar, which captured the limelight Monday by rising to a 23-year high of $0.9022 from $0.8973 late in New York closing Friday. Expectations for a further rate hike by the Reserve Bank of Australia, coupled with belief the worst of the sub-prime mortgage credit crisis has eased, has some analysts expecting the Australian dollar to climb even further. Australian Treasurer Peter Costello noted its high levels on Monday, saying they will create a difficult trading environment for the country's exporters. "This really represents a record level for the Australian currency, particularly when you take it into account against other currencies as well in what we call the trade-weighted index. It is at a very high level," Costello told ABC radio in Melbourne. "All things considered, a strong currency - whilst tourists like it - is not all that good for your economy and it is not particularly good for your exports," he added. Nonetheless, much like the European finance ministers, Costello ultimately has limited authority in doing much about currency levels. "Intervention is unlikely to limit longer term investment and with a strong economy, the (Reserve Bank of Australia) is likely to remain hawkish," said Brown Brothers Harriman analysts.