NEW YORK (CNN/Money) - The dollar rallied Monday in thin pre-holiday trade as easing concerns about protectionist U.S. trade policies shifted the market's focus back on the economic outlook.

The anticipation of positive economic reports pressured Treasurys, which fell prey to a rally in the stock market that diminished the allure of safe-haven debt and prompted investors to cash in on a week of gains.

Just before 4 p.m. ET, the euro bought $1.1765, down sharply from $1.1917 late Friday. The dollar bought ¥109.47, up from ¥108.77 late Friday. Last week the U.S. currency hit a record low against the euro and a three-year trough versus the yen.

Helping the dollar Monday were comments from Commerce Undersecretary Grant Aldonas that the United States hopes to repeal its legislation on tax breaks for exporters, which has drawn the threat of European Union sanctions, before March 2004. He also denied that the Bush administration was following a protectionist track.

"The idea that there is an overall protectionist trend is wrong," he said.

The U.S. government came under fire last week for imposing quotas on some Chinese textiles to try to stem a flood of imports. Washington is also in a dispute with the European Union over tariffs on steel imports imposed in March 2002.

"The general feeling now is that we're not moving toward protectionism. These kinds of statements are helping the dollar," Kenneth Landon, currency strategist at Deutsche Bank in New York, told Reuters.

Analysts also said comments from European Central Bank President Jean-Claude Trichet early Monday provided a boost to the dollar. Trichet said quite belatedly that the G7 statement in Dubai in September was aimed at encouraging some Asian nations to allow their currencies to rise in value against the dollar.

The dollar's gains gave a lift to equities Monday, easing fears that foreign investors, faced with the declining value of their dollar-denominated assets when converted back into their own currencies, would dump U.S. equities and Treasury bonds.

At the same time, the benchmark 10-year note slid 20/32 of a point in price to 100-3/32, yielding 4.23 percent, up from 4.16 percent late Friday. The 30-year bond edged 28/32 of a point lower to 104-14/32, with a yield of 5.07 percent, up from 5.01 percent Friday. Bond prices and yields move in opposite directions.

The two-year note slipped 5/32 of a point to 99-15/32, yielding 1.89 percent, and the five-year note fell 14/32 of a point to 100-19/32.

The market worried that a slew of figures due out in this holiday-shortened Thanksgiving week would point to another quarter of strong economic growth, a potentially bitter pill for Treasurys to swallow.

Bonds had rallied briskly last week despite positive news on the economy, partly because devastating attacks in Turkey sparked the sort of security concerns that usually send investors scurrying for the safety of government debt. But as the weekend passed without any major incidents, such fears appeared to subside.

"Nothing too terrible happened and stocks are up so bonds were able to cheapen up a bit," Mark Mahoney, Treasury market strategist at UBS. told Reuters.

On the economic front, Tuesday brings a second revision of third-quarter GDP. Analysts expect the growth reading to bump up to 7.8 percent from an already high 7.2 percent annualized rate. Tuesday also brings readings on consumer confidence in November and existing home sales for October.

Readings on weekly jobless claims, durable goods, personal consumption, new home sales, the Fed's "beige book" and purchasing management indexes from Chicago and New York -- are all set for release in Wednesday's shortened session.

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But traders also said speculators will be reluctant to be too short of bonds given the risk of attacks around the world over the holidays. Some fund managers also are likely to be concerned with adjusting their portfolios heading into the month's end.

"With many investors drifting away early for the Thanksgiving holiday and with the fixed income markets scheduled to close early on Wednesday, the clear potential is for some erratic price action in illiquid markets," Dana Johnson, head of research at Bank One Capital Markets, told Reuters.

The week also will offer little input from Federal Reserve representatives, with only San Francisco President Robert Parry speaking Tuesday. That's in contrast to recent weeks; Fed officials have been out in force reassuring markets that low inflation and high excess capacity means it is in no hurry to raise interest rates even if growth stays strong.  

-- Reuters contributed to this report.