Dollar falls against rivals
Euro and pound advance as investors seek higher yields amid sings of more government stimulus efforts.
NEW YORK (CNNMoney.com) -- The U.S. dollar fell against the euro and the pound Monday as investors' appetite for risk was revived amid signs that the government will step up its economic stimulus efforts.
The euro rose to $1.2936 in New York trading from $1.2716 on Friday.
Britain's pound gained about 1% to $1.4904 from $1.4739.
The dollar's retreat comes after president-elect Barack Obama indicated over the weekend that additional economic stimulus efforts are in the works.
At the same time, lawmakers appear close to a deal on the proposed bailout of the nation's automotive industry.
The positive sentiment sent stock prices sharply higher. The Dow Jones industrial average was up more than 300 points with about an hour left in the session.
Currency traders view the low-yielding dollar as safe-haven. As a result, the greenback often rallies when the broader market retreats. Conversely, the buck often looses ground against the higher yielding euro and pound when the market's appetite for risk is more robust.
The Japanese yen, which is also considered a haven, moved modestly higher against the dollar. It rose to ¥93.01 from ¥92.99.
Still, the advance comes against a backdrop of severe economic weakness. On Friday, a government report showed that the nation lost 533,000 jobs in November and that the unemployment rate rose to 6.7%.
Steve Malyon, currency strategist at Scotia Capital, said the market's hope that the government will "spend its way out of a recession" is overshadowing a more grim reality.
"Whether hope for a better future can continue to outweigh the reality of the rapidly deteriorating present will likely dictate the tone in the foreign exchange market early this week," Malyon wrote in a research note. 
