Dollar Edges Up Against Euro, Pound

The dollar rose against the euro on Monday, as the European currency backed off all-time highs set last week.

Dollar and Yen
Dollar and Yen

The euro bought $1.4568 in afternoon European trading, down from $1.4673 in New York late Friday -- and well below its all-time record of $1.4752, reached earlier in Friday's session.

The British pound , which has been trading at its highest levels against the dollar since the early 1980s, sank to $2.0679 from $2.0909.

Paul Jackson, a senior forex dealer at CMC Markets, said currency dealers took some profits on the euro after its latest highs.

He added that the dollar "is regaining some significant ground against the pound as sliding business confidence seems set to pave the way for a rate cut at the Bank of England."

No U.S. economic data were expected on Monday, the Veterans Day holiday, to help the markets gauge the direction of the economy and interest rates.

The dollar has been suffering from speculation that the Fed, which recently cut rates twice, may keep doing so even as its major European counterparts hold their rates steady.

U.S. government bond markets and related financial commodities markets are closed for the holiday. Other U.S. markets, including the stock markets, are open

Although lower interest rates can jump-start an economy, they can also weaken a currency as investors transfer funds to countries where they can earn higher returns.

The dollar weakened late last week after Federal Reserve Chairman Ben Bernanke said economic growth would slow noticeably in the U.S. in the coming months while rising oil costs would increase inflation pressures.

The dollar fell as far as 109.35 yen -- its first time below 110 yen for a year and a half -- in afternoon European trading, well below the 111.07 it bought in New York on Friday.