Dollar edges up as Fed debate shifts to size of pullback

Sha Ying | CNBC

The dollar edged higher against the euro on Monday as dismal U.S. durable goods data did little to shift expectations that the U.S. Federal Reserve's wind-down of its stimulus program is around the corner. Analysts said the Fed's rollback will be incremental given that the data, which came after soft U.S. housing numbers last week, suggested economic growth this quarter will probably not accelerate as much as economists had forecast.

Against the yen, the dollar slipped 0.3 percent to 98.44 yen, below Friday's high of 99.15 yen, the U.S. currency's highest level since Aug. 5. It fell as low 98.19 after the durables report, according to Reuters data.

The euro drifted lower to $1.3368, down 0.1 percent, partly weighed by worries about Italy. Italian Prime Minister Enrico Letta met with a top official from Silvio Berlusconi's center-right party on Monday to try to defuse a dispute threatening to bring down Letta's fragile ruling coalition. Investors are worried that Italy's plans to mend its finances will fall apart if the coalition crumbles and that a period without a government could make it tricky for the European Central Bank to shield it from market pressure.

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