LONDON (AFP) - The dollar weakened on Monday in subdued trade on holidays in Tokyo and New York, as investors held their breath for more indicators on the US economy and monetary policy, analysts said.
"Whether this (fall in the dollar) continues this week will depend on US bank earnings -- JPMorgan, Goldman, Citigroup, Bank of America -- and central bank rhetoric," analysts at Barclay's Capital wrote in a note.
"Part of the dollar's weakness stems from the declining need for a safe-haven currency and the rise in investors' appetite for risk."
In late morning trading here, the European single currency rose to 1.4797 dollars from 1.4727 dollars late in New York on Friday.
Investors will listen for comment from the US Federal Reserve and European Central Bank "and whether this rhetoric continues to point to the punch bowl remaining out and keeping asset markets perky," Barclays Capital said.
Against the Japanese currency, the dollar advanced to 89.74 yen from 89.32 yen on Friday.
"A strong earnings season should improved market sentiment and risk tolerance and support market confidence going forward," said Barclays Capital analyst Moyeen Islam.
The dollar found some support after Federal Reserve chairman Ben Bernanke's comments last week that US interest rates could be on the rise. A hike in interest rates would make the dollar more attractive to investors.
Despite the dollar's recent rise, dealers do not expect the greenback to climb much higher as equities continue to reflect a good start to the earnings season, analysts from Societe Generale said in a report.
The US currency had come under pressure recently from speculation that the United States would be slower to tighten monetary policy than other central banks.
The Fed cut interest rates to virtually zero percent last December to help jolt the economy out of its worst recession in decades.
Elsewhere on Monday, the British pound slumped to multi-month lows versus the euro and the dollar as investors assessed the economic outlook, despite the London stock market striking its highest level for more than a year.
Sterling slumped as the centre for economics and business research (cebr), a consultancy, forecast that the Bank of England, the central bank, would keep British interest rates at a record low 0.50 percent until 2011.
In London on Monday, the euro was changing hands at 1.4797 dollars against 1.4727 dollars late on Friday, at 132.73 yen (132.86), 0.9363 pounds (0.9292) and 1.5168 Swiss francs (1.5191).
The dollar stood at 89.74 yen (89.77) and 1.0256 Swiss francs (1.0311).
The pound was at 1.5797 dollars (1.5839). The lowest levels reached by sterling on Monday were 1.0696 euros and 1.5729 dollars.
On the London Bullion Market, the price of gold edged up to 1,058.75 dollars an ounce from 1,051.50 dollars an ounce late on Friday.
