* Dollar drops vs yen, euro recovers vs dollar
* Trading volatile on U.S. holiday
* Sterling slammed on report rates to stay low
(Adds details, quote, updates prices)
By Nick Olivari
NEW YORK, Oct 12 (Reuters) - The dollar fell on Monday as
investors positioned ahead of U.S. corporate earnings later
this week on expectations that better-than-forecast results
will drive risk tolerance higher.
Though the relationship has weakened in recent months, some
investors are still selling the dollar against other currencies
as they buy riskier assets.
Results from JPMorgan Chase & Co <JPM.N> and Goldman Sachs
Group Inc <GS.N> are slated for later this week. []
Trading was light and volatile, with many investors off for
the U.S. Columbus Day holiday.
Given the holiday, "we seeing some exaggerated moves here,"
said Joe Manimbo a currency trader Travelex Global Business
Payments in Washington.
"It's a quiet start to the week, given the holiday, and the
market is positioning for some of the financial earnings."
In New York trade, the dollar was 0.1 percent lower at
89.71 yen <JPY=> after rising to 90.46 yen earlier in the
session, the highest since Sept. 25. Friday's gains helped keep
the dollar from the trough touched last week, which was the
lowest since January.
The U.S. currency shed early gains against the euro as
factors such as large deficits and concern about its status as
the pre-eminent reserve currency weighed.
The euro rose 0.5 percent to $1.4796 <EUR=>, recovering
from early losses. The single European currency advanced 0.4
percent against the yen at 132.73 yen <EURJPY=R>.
Trading was described as light due to Tokyo markets being
shut for a one-day holiday and the U.S. holiday.
Sterling fell broadly, losing 0.2 percent against the
dollar <GBP=>, 0.8 percent against the euro <GBPEUR=R>, and 0.9
percent against the Swiss franc <GBPCHF=R>, according to
Reuters data, after a report said British interest rates would
stay at rock-bottom levels for some time.
Sterling traded at about a five-month low against the
dollar and a seven-month low against the euro.
The Centre for Economics and Business Research said British
interest rates would stay at 0.5 percent until 2011 and not
rise to 2 percent until 2014. For details, see []
"That doesn't come as a surprise to anybody," said Marc
Chandler, head of global strategy at Brown Brothers Harriman in
New York. "They are going to keep rates on hold for some time."
A surprise rate hike by Australia last week also put
renewed market focus on the direction of interest rates.
The dollar rebounded last Friday after U.S. Federal Reserve
Chairman Ben Bernanke said Thursday that policy could be
tightened as a recovery takes hold.
St. Louis Federal Reserve President James Bullard added to
the debate on Sunday, saying medium-term inflation risks in the
U.S. economy could be higher than thought.
(Editing by Jeffrey Benkoe)
