The U.S. dollar gained on the euro in European trading Monday, regaining its footing after being unsettled by China's decision to sever its currency's peg to the dollar last week. The 12-country euro was trading at US$1.2033, down from the US$1.2064 it bought in New York late Friday, as the dollar built on news of robust growth in the U.S. economy. Britain's currency was also weaker against the dollar, buying US$1.7350 as compared to US$1.7374 in New York at the end of last week, amid persistent uncertainty surrounding the recent terrorist attacks in London. The dollar was also stronger against the Japanese yen, opening the week at 111.89, up from 111.20 in New York late Friday. The dollar initially dropped after China's announcement Thursday that it was cutting the link between its currency, the yuan, and the dollar, and instead set its value against a basket of foreign currencies. But the dollar has recovered some since then as traders wait and see how China manages the new system. Traders were now keeping a close eye on how the dollar will respond to key U.S. economic data set for release later this week, including second-quarter gross domestic product data Friday. The dollar has risen in recent months as expectations for higher U.S. interest rates overcame concerns about the massive U.S. trade and budget deficits, which leaves dollars in the hands of foreigners, according to a report of The Associated Press.
