DOLLAR RISES BUT FAILS TO HOLD ALL ITS GAINS

DOLLAR RISES BUT FAILS TO HOLD ALL ITS GAINS

The U.S. dollar rose Monday, particularly against the Japanese yen, but was unable to hold all of its gains.

Some U.S. banks were seen selling dollars Monday morning, sources said.Also, in light of European fund and corporate sales of the dollar against the deutsche mark last week, the market is wary of heavy selling on upmoves and might try to beat those funds to the punch.

Fears also remain in the market that European central banks might look to sell dollars at higher levels for reserve adjustments.

The market is mixed about what to do with the dollar at this time. Technically, the break above 88.00 yen suggests a move to 90.00 yen.

One rumor had it that hedge fund investor George Soros has bought several billion dollars against the yen, partially through the options market. Another rumor said Chinese monetary authorities were selling dollars near 1.3980 deutsche marks.

Chinese authorities are believed to target a 50 percent dollar reserve position, and pressure on the dollar is expected to ease somewhat when that target is met. Some market watchers believe the authorities have neared that level given the central bank's presence in recent months.

Chances of a frosty reception for Federal Reserve Chairman Alan Greenspan at congressional testimony Wednesday have melted in Washington's summer heat - helped by the Fed's recent easing step and healthier economic data.

The House Banking subcommittee on domestic and international monetary policy, chaired by Mike Castle, R-Del., will hear semi-annual Humphrey Hawkins testimony Wednesday on the outlook for Fed monetary policy and the economy.

With Mr. Greenspan likely to paint a positive outlook for the economy, lawmakers will have little to complain about, analysts said.

''It will be a fairly upbeat assessment of current conditions relative to Fed objectives," Mickey Levy, chief financial economist with NationsBanc Capital Markets Inc., said. "I expect Greenspan to, as usual, be cautious, but be cautiously optimistic about how things are unfolding."

"Greenspan's in a very favorable position, particularly with this latest batch of economic news," David Jones, chief economist at Aubrey G. Lanston, said, referring to recent gains in payroll employment, consumer confidence and retail sales.

''We've got an economy that looks like it's on a steady growth path with low inflation," he added.