By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar weakened slightly Monday, as weekend reports gave investors a bit of hope that policy makers will be able to get a grip on Europe's debt crisis and after signs pointed to strong retail sales for the Thanksgiving weekend.
The dollar index DXY -0.36% , which measures the greenback against a basket of six major currencies, traded at 79.316, compared to 79.688 in late North American trading on Friday.
‘Black Friday’ retail sales were strong, said analysts at Brown Brothers Harriman, and “will likely kick off a series of relatively favorable U.S. economic reports, capped by the employment report.”
“Counter-intuitively, the dollar has often retreated in the face of favorable economic data. The key is the high correlation of risk assets,” they said.
Investors have flocked to the U.S. dollar lately for its perceived safe-haven qualities as Europe’s debt troubles have escalated.
Italian bond yields climbed again to levels markets regard as unsustainable in the long term, while Hungary and Belgium saw credit-rating downgrades late last week.
However, reports out on the weekend suggested a range of fresh developments could be on the cards for Europe.
The separate news reports said European officials have agreed on how to leverage a key rescue fund, that the International Monetary Fund may act to backstop Italy, and that French and German officials were discussing deeper integration. Read more on European reports.
The euro EURUSD -0.30% rose to $1.3282 against the greenback, compared to $1.3224 in late trading on Friday.
The British pound GBPUSD +0.09% traded at $1.5497, up from $1.5470. in late trading at the end of last week.
Against the Japanese yen USDJPY +0.08% , the dollar bought ¥77.64, up from ¥77.405 on Friday
A senior Japanese finance ministry official said Monday his nation could conduct further solo intervention in the foreign-exchange market and suggested that the yen is overvalued, according to a Dow Jones Newswires report.
The official also reportedly said there was “no reason that Japan should be regarded as a safe haven.” See report on Japanese comments on forex intervention.
Sarah Turner is MarketWatch's bureau chief in Sydney.
