By William L. Watts and Lisa Twaronite , MarketWatch
LONDON (MarketWatch) — The dollar posted small gains against most of its major rivals on Monday, stabilizing in part due to relief over Friday’s agreement to prevent a U.S. government shutdown.
The dollar index (DXY 75.04, -0.03, -0.04%) , a measure of the U.S. unit against a basket of six major rivals, traded at 74.963, up slightly from 74.892 in North American hours late Friday after briefly pushing back above the 75 level.
Congressional leaders and the White House on Friday reached a late-hour deal to keep the federal government running and avoid the first shutdown in 15 years. Read more on U.S. budget deal.
But the lack of a stronger rebound by the greenback indicates that the attribution of the dollar’s recent losses to budget worries was misplaced, wrote strategists at Commerzbank in Frankfurt.
“In our view, it is not the U.S. budget but U.S. monetary policy which constitutes the largest negative factor for the dollar,” they said, in a research note. “The [foreign-exchange] market reaction confirms our theory.”
They contend the dollar will rebound significantly only if stronger-than-expected data appear likely to inspire the Fed to move more quickly toward ending its latest round of quantitative easing.
The euro (EURUSD 1.4428, -0.0027, -0.1868%) slipped to $1.4465, from $1.4476 in late North American trading Friday. See real-time currency quotes and tools.
The Australian dollar (AUDUSD 1.0540, -0.0014, -0.1326%) also edged down, buying $1.0553, compared with $1.0569 late Friday.
The Australian currency has been rising to record highs against the greenback in recent weeks, buoyed by hopes of further gains in commodities. The euro also strengthened recently in anticipation of last week’s interest-rate hike by the European Central Bank.
But some strategists see the dollar beginning to fight back against those two rivals.
“There are signs that the market is getting a bit of altitude sickness in the likes of [the euro] and [Australian dollar], and the gains from this point forward may be slower to materialize,” said Daragh Maher, foreign-exchange strategist at Credit Agricole.
Against the Japanese yen, the dollar (USDYEN 84.5700, -0.2900, -0.3417%) was down slightly at ¥84.70, compared with ¥84.82 late Friday.
The dollar extended its dip after northeast Japan was rattled by a 6.6-magnitude earthquake on the one-month anniversary of March's devastating 9-magnitude quake and tsunami. Monday’s quake had a preliminary magnitude of 7.1 but was later downgraded to 6.6 by the U.S. Geological Survey. Read "Japan hit by 6.6 quake; evacuation zone widened."
The British pound (GBPUSD 1.6373, -0.0002, -0.0122%) traded at $1.6359, down from $1.6386 late Friday.
