Dollar weakens on upbeat economic data

NEW YORK (CNNMoney.com) -- The dollar was lower on Monday, as strong economic data fueled investors' hopes that the economic recovery is a sure bet.

What prices are doing: The dollar fell 0.4% against the yen to ¥94.245 and 0.5% versus the British pound to $1.529. But rose 0.1% to $1.348 against the euro.

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What's moving the markets: The value of the greenback dipped as investors returned from the long weekend with improved confidence in the economic recovery.

Friday's much-anticipated jobs report from the Labor Department, which said that the U.S. added 162,000 jobs in March, was an indication that the economic recovery has taken hold.

A separate report from the National Association of Realtors on Monday showed that contracts for home sales soared in February.

This helped send the major indexes, which began the session at 18-month highs, even higher. The Dow Jones industrial average inched toward 11,000, the highest level since September 2008.

A rising stock market tends to send the dollar down against major currencies, as traders flee safe haven currencies, such as the dollar, for riskier ones.

What analysts are saying: "This is a risk rally we're seeing after a hot non-farm payrolls number," said Kathy Lien, director of currency research for GFT.

The dollar weakened against the euro for a short time before regaining strength in afternoon trading. Many analysts say that the euro's performance will continue to be muted by worries over Greece's stability.

"Credit default swaps for Greece, Portugal and Spain surged to recent highs this past week, just after the EU accord on Greece, which should serve as a reminder that EU credit concerns are still an issue," analysts for Forex.com said.

The British pound continued to enjoy a boost because of better-than-expected economic reports announced by the U.K. government last week.

According to Lien, there has been speculation in recent weeks that the Fed could make moves on key interest rates sooner than expected. The greenback fell sharper after the Federal Reserve's closed door meeting on Monday resulted in no changes to current policies.

But many investors remain cautious as the economy rebounds.

"The improvements in the U.S. economy should give the Fed the nudge that they need to tighten monetary policy more quickly," said Lien.

Looking ahead: Investors will be keeping a watch on China's currency policy, which many economists believe has been artificially held down to boost Chinese exports and bolster its economy.

Revaluation of the Chinese yuan would be seen as supporting the global recovery by improving the export competitiveness of developed economies such as Japan or Germany, Forex.com analysts said.

Several economic reports are due out this week, including consumer credit and chain-store sales.