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Greenback slightly

firmer in dull session

NEW YORK: The dollar firmed slightly in extremely quiet trade on Monday as the market remained in a consolidation phase in the aftermath of last week's big rally.

"The U.S. session has been very lackluster," said Jack Griffin of Fuji Bank, noting vacations are making for very light activity. Griffin said that while the dollar paused a bit after the sharp gains, sentiment seemed to have clearly shifted in its favor, particularly against the yen.

The joint U.S.-Japan dollar intervention on August 2 and Japan's initiatives to boost overseas investment continue to underpin dollar/yen, he said.

At the close, the dollar was at 1.4355/62 marks, up from 1.4330/35 marks at the open but it was softer from Friday's U.S. close at 1.4392/02 marks. It inched higher to 93.60/70 yen at the close from the open's 93.50/53 yen but lower than late Friday's 93.85/95 yen.

The dollar ran into some profit-taking overnight after hitting highs of around 1.4470 marks and 94.42 yen, which dealers said was to be expected after the recent move.

"After last week's strong dollar upmove, the dollar has registered as somewhat overbought," said Charles Spence, director of Treasury sales at Standard Chartered Bank.

With the market so quiet, Spence noted, "there are no new incentives to take the dollar higher."

The dollar still has some technical barriers, namely a five-year trendline at 94.30 yen, Spence said. He noted the dollar briefly broke through that level but the move was not sustained.

Economists in a Reuter poll expect a 0.2 percent drop in July industrial output after June's 0.1 percent gain. Capacity use is seen falling to 83.1 percent in July from 83.5 percent.

While the numbers on industrial production and capacity use may stir up activity a bit, players say the key piece of data affecting the dollar this week will be the U.S. international trade balance, which is expected on Thursday.

Players are also looking to see if the Bundesbank will allow the securities repurchase rate to ease a few more notches at this week's tender.

At the close, the dollar was at 1.1943/53 Swiss francs, up from the open's 1.1925/35 Swiss.

It was at Canadian $1.3614/19, up from C$1.3609/14. Sterling was at $1.5705/15 from $1.5770/80.

The Australian dollar closed at $0.7422/27.

At midday, the Morgan Guaranty trade-weighted index stood at 92.6 percent of its 1990 trade-weighted value.-Reuter