LONDON, Aug 18 - The dollar probed the upper end of this month's ranges against the euro and Swiss franc on Monday as upbeat U.S. economic data last week bolstered optimism the world's biggest economy is on the mend. With little economic data scheduled during the session, the market was looking forward to a U.S. consumer confidence report from the University of Michigan on Tuesday, postponed from last week after power cuts in North America. "The theme of recent weeks has been upbeat data from the U.S. and downbeat data from the euro zone. This, along with the shift out of bonds and into equities, appears dollar positive," said Mitul Kotecha, global head of foreign exchange research at Credit Agricole Indosuez. The euro, which has tumbled seven cents against the dollar in the past two months, extended losses below $1.1220 in early European trade, down a third of a percent on the day. Chart watchers said a break of $1.12 would open the way to further losses, while a fall below $1.1110 would take the single currency to its lowest since April, a month before the euro notched its record high above $1.1930. The dollar was slightly higher against the Japanese currency at 119.35 yen and up half a percent against the Swiss franc .
STOCK WATCH
Japan's Nikkei <.N225> stock market average closed above 10,000 for the first time in a year on Monday, and European shares were also set to build on last week's advance to eight month highs. U.S. stock futures were pointing to a strong Wall Street open. "The market's theme now is the U.S. economy and the mood is good, so the dollar was little hurt by the rise in the Nikkei," said Toru Umemoto, currency strategist at Morgan Stanley Japan. Any increased appetite for yen related to the Nikkei rise was offset by falls in Japanese Government Bond prices due to worries about a 20-year JGB auction on Tuesday. The government recently announced it would boost the issuance volume of this maturity. Many investors are cautious about long-dated bonds after signs of a Japanese economic recovery in recent data, sending the yield on key 20-year bonds up by 10 basis points to a 10-month high on Monday.//