Dollar higher in early trade, ahead of Greenspan's testimony
The dollar rose slightly higher against the euro in early trade, as analysts said activity appeared to settle down since the G7 meeting over the weekend.
Notably, euro-dollar was back below $1.27.
It is thought that until the US economic recovery story is supported by strong employment growth and a rise in short-term interest rates, it is going to be difficult for the dollar to make much headway.
Against this background, US Federal Reserve Board chairman Alan Greenspan's testimony on monetary policy to Congress later today will set the tone for trading for the next three weeks, analysts said.
Simon Derrick, head of currency strategy at Bank of New York, said investors will try to gauge if Greenspan's testimony deviates in tone from previous comments, inferring a signal for the market to re-assess the likely path of short-term interest rates.
The next US labour market report on March 5 will also be eagerly awaited.
Tentative evidence of dollar weakness beginning to concentrate in Asia is also an issue of interest.
The Singapore dollar rose against the US dollar by about 1.5% over the last two days, while New Zealand Finance Minister Cullen said his government is considering ways to stem the kiwi dollar's rise.
Meanwhile, the dollar-yen cross remained almost static, amid rumours of a Japanese plan to weaken the yen.
The pound was well bid, ahead of the Bank of England's quarterly inflation report later this morning.
The report will give some insight into interest rate decisions in the next few months.
