Dollar Gains As Economic Uncertainty Dominates

The dollar and yen, both commonly used by traders as safe havens, moved higher in light trading Monday as uncertainty about the strength of the economic recovery lingered.

The euro, used by 16 European countries, dropped to $1.2682 in late New York trading from $1.2711 late Friday. It touched as low as $1.2647, its lowest point since July 13.

The euro has been volatile this summer, bouncing from a four-year low just under $1.19 in early June as investors worried about the European debt crisis and slow growth, to a three-month high above $1.33 in the first week of August.

There was no economic data released in the U.S. Monday, but a survey of purchasing managers in Europe suggested that business activity grew more slowly in August. That "did the euro no favors," said Brown Brothers Harriman currency strategists in a research note.

The British pound was nearly flat. It edged up to $1.5535 from $1.5530 on Friday, while the dollar slipped to 85.28 Japanese yen from 85.76 yen.

The dollar rose nearly 1 percent against an index comprised of six major currencies. The yen also gained versus the euro and pound.

Interest rates on U.S. Treasury debt, another favored safe haven investment, remained near their lowest levels this year Monday. The yield on the 10-year note is close to a low from March 2009, when the Standard & Poor's 500 index hit its weakest point since 1996 because of heavy job losses and a deep recession.

In other trading Monday, the dollar rose to 1.0394 Swiss francs from 1.0357 francs, and gained to 1.0514 Canadian dollars from 1.0487 Canadian dollars.