NEW YORK (Dow Jones)--The dollar is holding its own against the yen in early New York trading Monday, but the euro is gaining against the Japanese currency, indicating mixed messages in the foreign exchange market. Major currencies are trading within well-established ranges and are little changed from late Friday. Analysts expect currencies to remain bound within recent ranges until the end of summer, during which trading is choppy and thin. Economic data released last week in the U.S. and euro-zone were mostly positive, leading to increased appetite for risk and a strengthening of the euro and other high-yielding currencies. But U.S. jobless claims, which unexpectedly rose, along with weekend comments from the European Central Bank's Jean-Claude Trichet warning of a "very bumpy road ahead" could also be leading investors to take shelter in the dollar. The euro was trading early in New York at $1.4326 from $1.4337 late Friday, according to EBS via CQG. The dollar was at Y94.70 from Y94.35, and the euro was at Y135.68 from 135.21. The pound traded at $1.6506 from 1.6541, and the dollar was at CHF1.0600 from 1.0571. Comments from Federal Reserve Chairman Ben Bernanke and the ECB's Trichet might have helped convince the markets that while the recovery may remain gradual, central banks won't rush to tighten economic policy. "The comments should help to ensure that markets do not misinterpret the signs of recovery as a cue for officials to begin hiking interest rates," said Mitul Kotecha, head of foreign exchange strategy at Calyon Credit Agricole in London. Low interest rates in the U.S. and euro zone might be leading investors into higher-yielding currencies, such as the Australian dollar and South African rand. The Australian dollar hit an early intraday high against the U.S. dollar at US$0.8417. Kotecha said "risk-trades" would continue to propel the higher-yielding currencies this week, and would put downward pressure on the dollar. Still, although risk-sensitive currencies are gaining, the dollar is hanging in there, signalling investors are not thoroughly convinced that a global economic recovery is just around the corner. "In our view, it is premature to declare the all-clear just yet," said Steven Barrow at Standard Bank in London. Equity markets also continue to drive currencies. The 1.7% rally in the Dow Jones Industrial Average Friday was followed by Monday's 3.4% rise in Japan's benchmark Nikkei index and a 1.1% gain the Shanghai Composite. In Europe, most bourses were higher. However, China Premier Wen Jiabao expressed caution Monday about being "blindly optimistic" regarding a global economic recovery. He said China must maintain stable macroeconomic policies, namely its "moderately loose" monetary policy and "active" fiscal policy Expectations that Beijing might rein in loan growth had caused sharp falls in Chinese stock prices for much of this month, reverberating through global markets and affecting currencies. Canada Morning The Canadian dollar is higher Monday morning as it benefits from news that Canadian retail sales grew at a much faster than expected rate in June, buoyed by higher prices for gasoline and other goods. Sales jumped 1% to C$34.36 billion (US$31.76 billion), just marginally slower than the 1.1% gain the previous month, which was revised down from the initially estimated 1.2%. The market had expected only a 0.2% increase. The news bolstered a Canadian currency that had already gained on generally weaker tone in the U.S. dollar. A report from BMO Capital Markets said Canadian dollar outperformed most currencies Monday morning, save for the Rand, Norwegian and Swedish. It was on par with the Australian and New Zealand dollars and Brazilian real, BMO said. "Last week's sell USD/CAD recommendation by Goldman will keep the downward pressure on the pair with a rally likely capped at 1.10 for now," BMO said. "The rallies are becoming shallower and therefore, the sell-offs will likely get deeper as the overall bearish tone on the USD is only increasing," it added. The U.S. dollar was trading at C$1.0737 after touching a low at C$1.0744, its lowest level since Aug. 6, according to EBS via CQG, and from C$1.0824 late Friday. (Nicholas Hastings in London, Don Curren in Toronto and Liu Li in Beijing contributed to this report.) -By Bradley Davis, Dow Jones Newswires; (212) 416-2654; bradley.davis@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=volVj0Da4Km1o4h%2FMmQEQA%3D%3D. You can use this link on the day this article is published and the following day.

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