American greenback likely to hold gains

American greenback likely to hold gains

NEW YORK (Dow Jones): The dollar emerged from a rangebound week Friday with renewed sway over the euro and the yen, shrugging off a rebound in monthly trade deficit that points to weaker first-quarter growth.

This pattern is expected to continue into this week, as a slate of euro-zone data are forecast to show more weakness and U.S. data are light. But market watchers should pick up clues in the meantime that hint at trends to come.

"Markets are marooned right now, but there's a lot happening that could break one way or the other," said Tim Stewart, currency analyst at Morgan Stanley in New York.

In Asian trading, the dollar gained a full yen on the Bank of Japan's decision to leave monetary policy unchanged but to expand its market operation tools. This added to investors' concerns over the likely pace of financial reform in Japan under the new government.

Though he saw the move as "purely technical," Stewart said many in the market think the BOJ move paves the way for "aggressive monetarization of debt," which would be yen-negative.

The euro lost a half-cent in London trading as a major euro sell order from a German name-- which had previously been seen as a buyer-- pushed the single currency through support at $0.8790.

Market talk that Alcatel of France may buy Lucent also sparked some euro selling, traders said, as did soft euro-zone industrial production figures.

Late Friday, the euro was at $0.8798, down from $0.8812 in London and from $0.8826 in New York late Thursday. The dollar was at Y123.65, up from Y123.28 in London and from Y122.51 late Thursday in New York.

Against the dollar, sterling traded at $1.4388, up from $1.4322 late Thursday. Against the Swiss franc, the dollar traded at 1.7440 francs, up from 1.7387 francs late Thursday.