The dollar crept higher on Monday, recovering from a dip after surprisingly poor US wages on Friday that offered the vast majority who see a stronger greenback this year room to reload.

Dealers said there had been leveraged demand for dollars from the opening in London, but added that the move was happening in minimal liquidity in a market thinned out overnight by a holiday in Japan.

Friday’s wage numbers cast doubt on one of the main sources of the US currency’s drive higher over the past six months, questioning why the Federal Reserve should raise interest rates this year in the absence of clear evidence of pressure on inflation.

But the other main leg, that counterparts in Japan and Europe are headed in the opposite direction, remains firmly in place. The dollar was up 0.2 per cent against the euro and a quarter of a per cent higher against a basket of currencies.

“This might be a fund executing a dollar-buying strategy but it looks to me to be happening in fairly thin liquidity. I don’t see much of a catalyst for it this morning,’’ said Graham Davidson, a spot dealer with National Bank of Australia in London.

“Very often you see this sort of move early on a Monday and it then peters out quite quickly. I am still dollar positive, but I’m reluctant to get involved at the moment.’’

The greenback had eased slightly in Asia as dollar bulls struggled to get over their disappointment at the unexpected fall in US wages on Friday.

“This outcome will fuel the debate on whether the Fed will trust the usual relationship between falling unemployment and rising wages to eventually bear fruit, or sit on its hands until it sees some real wage pressures,’’ said Raiko Shareef, currency strategist at BNZ.

The dollar struck a one-week low of 118.12 yen, but by 0853 GMT it had recovered steadily to trade 0.15 percent higher at 118.69. The euro eased to $1.1814, still well off a nine-year trough of $1.1754 plumbed on Thursday.

Italy’s central bank chief had warned on Sunday the risk of deflation in the euro zone should not be underestimated. He said the best way to deal with the problem was to buy government bonds, supporting expectations the European Central Bank will opt to do so at a meeting on January 22.

With the ECB on the verge of such outright printing of new money to shore up the economy, an influential adviser to Europe’s top court will give his view on Wednesday about an earlier unused bond-buying scheme. Some analysts believe that could at least give the bank pause for thought.

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