The dollar traded near a six-week peak against the euro and a three-month high versus the yen this afetrnoon as markets concluded that last Friday's weak US housing data did little to shore up receding expectations of a Federal Reserve interest rate cut.
The low-yielding Japanese currency looked weak across the board as investors continued to favour selling low-yielders to fund purchases of higher return assets in carry trades.
European market activity was thin due to public holidays in Germany, Switzerland and Britain, while US markets were also expected to be quiet due to the Memorial Day holiday. Data on Friday showed that the pace of existing US home sales in April was the weakest since June 2003.
Analysts concluded, however, that the figures would not be enough to dent broadly positive dollar sentiment as investors were still convinced that the Fed was in no hurry to cut rates from their current 5.25 per cent.
Other recent US data has been supportive of that view. New US home sales for April released early last week showed their sharpest climb in 14 years, signalling a stabilising housing market and lowering expectations of a rate cut.
"We've seen that the past couple of weeks have been more positive in terms of sentiment towards the dollar and even though we got poor figures from the housing makret it didn't change perceptions -- people didn't see that as having a big impact on monetary policy," said Johan Javeus, FX strategist at SEB.
By noon, the euro was up 0.1 per cent on the day at $1.3454, but still within sight of a six-week low of $1.3410 hit on Friday. It was flat against the yen at 163.73.
The dollar was flat against the yen at 121.66 yen, having hit a three-month peak of 121.88 on Friday and still within reach of a four-year high around 122.20 yen touched in January.
There was no reaction in Asian overnight trade to news that Japan's farm minister committed suicide after media reports linking him to a number of political fund scandals.