Dollar falls in light trading
Markets remain in holiday mode. Hostilities in the Middle East escalate concerns about oil supply.
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| The greenback remained weak as it entered a second consecutive holiday week of trading. |
NEW YORK (CNNMoney.com) -- The dollar weakened against major currencies Monday, as a light trading day left markets largely inactive and Middle East conflict raised concerns about oil and commodities.
At 9:11 a.m. ET, the 15-nation euro was trading at $1.4296, up from $1.4025 late Friday. The British pound rose to $1.4616 amid expectations for U.K. interest rates to stand well below those in the euro zone.
Parity for the euro and pound is within sight, as the euro rose to an all-time high of 0.9722 pound.
Meanwhile, against the Japanese yen, the greenback slid to ¥90.27 from ¥90.78.
"There's still a holiday feel in the air," said Nick Bennenbroek, head of currency strategy at Wells Fargo. "The trading activity is very light, so the dollar is staying weak."
Bennenbroek said he expected the greenback would remain "defensive" for most of the week.
The possibility of higher oil and commodity prices due to conflict in the Middle East also raised further concerns about the U.S. economy.
The war-torn Gaza Strip has endured air strikes from Israeli warplanes for three straight days, following the Dec. 19 expiration of a six-month cease-fire with Hamas, which controls Gaza.
The strikes have killed hundreds, sparking protests and increasing concerns that oil supplies from the Middle East, the world's largest producing region, will be disrupted.
"There has been an inverse relationship between oil prices and the weaker dollar," Bennenbroek said. "When these geopolitical events happen, the dollar's decline is not unexpected."
Bennenbroek also noted that although the dollar is traditionally viewed as a safe haven, the buck's status "has been pretty mixed lately."
In sharp contrast to the greenback, the Swiss franc gained on the heightened geopolitical risk.
Commodity currencies including the Norwegian crown and Australian dollar strengthened as gold and oil prices rose amid the Gaza hostilities.
Gold rose more than 2%, to its strongest since early October. Oil prices rose above $40 a barrel, up nearly 8% on the previous session.
The dollar is probably near a bottom, Bennenbroek said, as the greenback has fallen sharply.
"What's going on now is not necessarily an indicator of what's going to happen," he said. "The dollar is probably going to gain against many currencies in the new year." 
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