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* Dollar recovers from modest losses in overseas trade
* Yen gains on lower U.S. yields, caution ahead of holiday
* Euro firm after Italy approves rescue plan for troubled
By Richard Leong
NEW YORK, Dec 23 The dollar held steady on
Friday, lingering about half a percent below a 14-year peak set
earlier this week, as traders moved to the sidelines ahead of
the Christmas holiday weekend.
The greenback will likely test fresh multi-year heights when
investors return from their year-end holiday break. The dollar
has rallied more than 5 percent against a basket of currencies
since Donald Trump's surprise U.S. presidential election win on
"No one wants to take additional risk between now and the
end of the year. They don't want to jeopardize those gains,"
said Stan Shipley, strategist at Evercore ISI in New York.
Traders brushed off upbeat U.S. new home sales and consumer
sentiment data, which reinforced the view the world's biggest
economy is expanding faster than its European and Japanese
Bets that Trump's economic policies would promote faster
U.S. growth and inflation have fed appetite for the dollar,
stocks and corporate bonds and stoked selling in the yen, gold
and U.S. Treasuries.
Federal Reserve's hint that it might raise U.S. interest
rates at a faster pace in 2017, together with European Central
Bank and Bank of Japan maintaining their ultra-loose policy
stance, have further bolstered the dollar in recent days.
The dollar index was marginally firmer at 103.14,
recovering from an earlier low of 102.89. It was not far from
the 14-year peak of 103.65 reached on Tuesday.
The euro was little changed after the Italian government
approved a rescue package for Monte dei Paschi di Siena
after the world's oldest bank failed to raise needed
capital from investors.
Worries about the European bank sector also diminished after
Credit Suisse and Deutsche Bank settled
with the U.S. Department of Justice over claims they misled
investors when selling mortgage-backed securities.
The common currency was flat at $1.0439, holding
above a nearly 14-year low of $1.0350 set earlier in the week.
With Japan markets closed for a holiday, the yen edged up
0.1 percent against the euro and the dollar at
122.47 yen and 117.38 yen, respectively.
The yen has recovered somewhat from its 10-1/2-month low
against the dollar this week on lower U.S. Treasury yields and
safe-haven bids stemming from attacks in Ankara and Berlin,
U.S. two-year Treasury yield was 1.197 percent,
little changed on the day, while U.S. 10-year yield
was down 1 basis point from Thursday at 2.537 percent.
Currency bid prices at 10:04AM (1504 GMT)
Description Last U.S. Close Pct Change
Euro/Dollar $1.0439 $1.0435 +0.04%
Dollar/Yen 117.3600 117.5100 -0.13%
Euro/Yen 122.50 122.65 -0.12%
Dollar/Swiss 1.0273 1.0255 +0.18%
Sterling/Dollar 1.2249 1.2282 -0.27%
Dollar/Canadian 1.3530 1.3482 +0.36%
Australian/Doll 0.7172 0.7214 -0.58%
Euro/Swiss 1.0724 1.0702 +0.21%
Euro/Sterling 0.8520 0.8489 +0.37%
NZ 0.6870 0.6901 -0.45%
Dollar/Norway 8.6985 8.7129 -0.17%
Euro/Norway 9.0810 9.0916 -0.12%
Dollar/Sweden 9.2197 9.2235 -0.03%
Euro/Sweden 9.6228 9.6253 -0.03%
(Additional reporting by Patrick Graham in London; Wayne Cole
in Sydney; Editing by Nigel Stephenson and Meredith Mazzilli)