* Yen falls broadly, further losses seen
* Dollar mixed, direction uncertain in thin trade
(Updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 28 (Reuters) - The U.S. dollar rose against
the yen and euro in holiday-thinned trading on Monday as
investors assessed the outlook for the greenback after a recent
rally.
Trade was light with many market participants in Europe off
between Christmas and the New Year. Markets in the United
Kingdom were also closed for a public holiday.
In Japan, Monday was the last working day of the year for
many companies, which resume normal business on Jan. 4.
"The dollar has recovered a bit from its losses last
Thursday, but I wouldn't put too much into the dollar's gains
today," said Vassili Serebriakov, senior currency strategist,
at Wells Fargo in New York.
"Liquidity is very light and the news flow is quite thin
and there's really been no real direction for the dollar at the
moment. We have to wait for next week to get any sense as to
where the dollar is going," he said.
Market impact from news of an attempt to blow up a
passenger plane flying to Detroit over the holiday weekend was
seen as limited. For full story, see []
The focus for many market watchers is whether the dollar's
rise will continue next month following its rebound from a
14-year low against the yen in November.
The dollar has risen broadly in recent weeks on optimism
the U.S. economy may be poised for better growth in 2010, said
Andrew Bekoff, chief investment officer for Family Office Group
in New York.
Gains against the euro in particular were bolstered by
concerns euro zone economies won't recover as quickly, he
said.
The ICE Futures' dollar index <.DXY>, a gauge of its value
against six major currencies, has gained nearly 4 percent so
far this month, on pace for its best monthly performance since
February.
On Monday, the index was flat at 77.642, and off a
3-1/2-month high of 78.449 set last week.
In late afternoon trading, the euro was down slightly
versus the dollar at $1.4380 <EUR=>.
The dollar was up 0.5 percent at 91.62 yen, not far off a
two-month high set last week <JPY=>. The euro was up 0.3
percent at 131.78 yen <EURJPY=>.
The yen fell broadly as investors took advantage of quiet
markets to position themselves ahead of a likely pick-up in
activity in the new year.
Analysts have also pointed to the robust correlation
between dollar/yen and 10-year U.S. Treasury yields, currently
at 93 percent, according to Reuters data.
U.S. Treasury yields have risen sharply this month and are
likely to see a further increase this week given Treasury
supply of around $118 billion in a thin market.
Ten-year yields were about 11 basis points away from
revisiting the 3.95 percent high for the year, while those of
two-year Treasuries were up more than 1.0 percent even though
the outlook for U.S. interest rates has not changed.
Analysts believe that if 10-year yields make a push for the
4 percent handle, dollar/yen could move above 92.
Dollar/yen has become more sensitive of late to Treasury
yields and interest rate expectations because the currency pair
has lagged major crosses during this month's rally in the
greenback when investors started to price in a stronger U.S.
recovery.
The dollar has risen 1 percent against the yen this year so
far after falling roughly 19 percent in 2008.
Other factors that could also move the dollar this week
include Standard & Poor's/Case-Shiller home price index for
October and U.S. consumer confidence for December on Tuesday.
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