Dollar slips vs. euro, pound

Traders focus on the 'long side'

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NEW YORK (CNNMoney.com) -- The U.S. dollar fell against the euro and the pound Monday after government officials worldwide announced coordinated efforts to stabilize financial markets.

The 15-nation euro traded at $1.3506, up from $1.3402 late Friday in New York. The euro rallied to $1.3683 earlier in the session before pulling back.

Great Britain's pound rose to buy $1.7284 from $1.7039. And the dollar jumped against Japan's currency, buying ¥101.11 from ¥100.51.

Trading in currency markets was light Monday as many U.S. banks were closed in observance of the Columbus Day holiday.

The euro was under pressure last week as global stock markets tumbled and investors shied away from risky trades. But world stock markets were higher Monday after finance officials in Europe and the United States took a series of aggressive steps to address the financial crisis.

The rally in global equity markets helped fuel demand for higher-yielding currencies like the euro and pound as investors appeared to regain some appetite for risk.

But the euro gave back some of its gains against the dollar as traders locked in profits at the close of trading in Europe, said Ashraf Liadi, chief market analyst at CMC Markets in New York.

Liadi expects the currency market's appetite for risk to remain strong as long as global stock markets continue to show signs of recovery.

"Everybody was expecting the market to push higher today," he said. "The question is: How long will the recovery last?"

On Wall Street, the upbeat sentiment was a welcome relief after the U.S. stock market suffered its worst week in history. The Dow Jones industrial average gained nearly 6% in afternoon trading.

Monday's gains came after the British government announced a $63 billion investment in three major banks. The U.S. government is also considering direct investments in ailing banks.

Meanwhile, the German government announced a rescue package worth as much as $671 billion to shore up its financial system.

The U.S. Federal Reserve, Bank of England, European Central Bank and the Swiss National Bank revealed coordinated steps to juice short-term funding markets. Bank of Japan said it will mull similar measures.

The Fed also said it will offer an unlimited amount of dollars to three other central banks to provide liquidity to the global banking system.

On Sunday, 15 European nations agreed to a wide-ranging plan to shore up troubled banks.