By Kosaku Narioka
The dollar declined Monday as market participants waited to see if the administration of U.S. President-elect Donald Trump can deliver new pro-growth economic policies next year.
Trading was thin because participants in many countries were away for public holidays. Some profit-taking on the dollar's recent surge weighed on the U.S. currency.
Market participants are now reluctant to keep buying the dollar after having lifted it since the U.S. presidential election in early November. The ascent was driven by speculation that President-elect Donald Trump will boost fiscal spending and introduce tax cuts, including possibly tax relief for U.S. companies repatriating earnings held overseas.
Market participants are now watching to see if Trump would indeed take steps to improve the U.S. economy.
"If he can works well with Congress, more dollar-buying is likely," said Akira Moroga, joint general manager of market products division at Aozora Bank. If that happens, the euro could test parity against the dollar next year, he said.
Read:Is the stock market ignoring one of the most important risks of 2017? (http://www.marketwatch.com/story/is-the-stock-market-ignoring-the-most-of-important-risks-of-2017-2016-12-23)
The euro was at $1.0462, up from $1.0456 late Friday in New York. The dollar was at Yen117.05, down from Yen117.49. The British pound was at $1.2285, compared with $1.2278.
Meanwhile, market participants are also watching if Trump expresses any concerns about the dollar's recent strengthening, which could damage the competitiveness of U.S.-based manufacturers in global markets.
The dollar has strengthened 3.7% against the euro so far this year. The U.S. currency has gained 7.0% against the Chinese yuan in 2016, though the dollar is still down 2.6% against the yen.
(END) Dow Jones Newswires
December 26, 2016 09:28 ET (14:28 GMT)
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