NEW YORK (CNN/Money) - The U.S. currency slipped while prices of Treasury securities posted small gains Tuesday after steep gains last week, with investors turning cautious ahead of a speech by Federal Reserve Chairman Alan Greenspan on Wednesday.
At around 3:30 p.m. ET, the dollar slipped against the euro and the yen, with the euro buying $1.2105, up from $1.2065 late Friday. The dollar bought ¥109.37, down from ¥110.47 late Friday.
In the bond market, the benchmark 10-year note rose 10/32 of a point to 100 even, yielding 4.25 percent, down from 4.29 late Friday. The 30-year bond gained 20/32 of a point at 105-7/32 to yield 5.02 percent, down slightly from late Friday's 5.05 percent. Bond prices and yields move in opposite directions.
The two-year note was unchanged from last Friday at 99-20/32 to yield 2.58 percent, while the five-year note rose 5/32 of a point to 100-5/32 to yield 3.46 percent. Financial markets were closed Monday for the Labor Day holiday.
U.S. jobs data released Friday supported expectations the Fed would raise interest rates by 25 basis points later this month to 1.75 percent and sent the dollar 1 percent higher against the major currencies. But the numbers failed to provide a sustained boost for the dollar, with markets already pricing in a quarter-point rate hike this month.
"We're seeing a bit of a rebound in other currencies because of some profit-taking on the dollar," John McCarthy, director of foreign exchange at ING Capital Markets in New York, told Reuters.
"We kind of overreacted on Friday, aggressively buying dollars. But the market has calmed down since then and we seem to be stuck in relatively defined trading ranges," he added.
Greenspan's testimony on Wednesday before the House Budget Committee is expected to reiterate the Fed's stance that interest rates will have to rise at a moderate pace. Analysts question whether this will be enough to power the dollar higher again.
"The market is correcting Friday's move (after payrolls)," said Ian Gunner, head of foreign exchange research at Mellon Bank in London. "People are looking toward Greenspan and waiting to see how the U.S. will react after Labor Day."
A report by employment consulting firm Challenger, Gray & Christmas on Tuesday said U.S. job cuts rose to a six-month high in August with 74,150 layoffs. Some managers remained concerned about the economy's susceptibility to shocks, but hirings also increased nearly five-fold last month, it said.
Friday's pick-up in non-farm payrolls came after two months of disappointing employment numbers.
While it allayed concerns the U.S. economy may be losing steam and gave the dollar a general boost, it was not strong enough to extend the greenback's gains ahead of Greenspan's speech.
The Fed has raised interest rates twice since late June and is widely expected to push them up to 1.75 percent at its next policy meeting on Sept. 21.
Until then, any comments from the Fed will be closely watched. Federal Reserve Bank of Dallas President Robert McTeer, who is not a member of the Fed's Open Market Committee this year, speaks later on Tuesday.
Analysts said market caution was also driven by concerns ahead of Friday's release of U.S. international trade data after the previous month's numbers sparked a sharp dollar sell-off.
-- from staff and wire reports
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