By Don Curren

NEW YORK (Dow Jones)--After retreating in earlier trading on increased risk appetite, the dollar has recovered against a broad range of currencies in early North American trading Monday after U.S. stock futures waver.
The dollar is back to levels not far from its late Friday positioning against the euro as stock futures turned lower Monday with a downgrade of Cisco Systems and the apparent collapse of the IBM/Sun Microsystems deal clouding sentiment.
"The stock futures have come off their highs and are net down on the day...so the dollar is rebounding," said Adam Cole, chief currency strategist at RBC Capital Markets in London.
Equity market fluctuations will be the key driver of the dollar Monday and likely through the balance of the week in the absence of many significant data releases or other potentially market-moving events, he said.
"I think we'll pretty slavishly follow the stock market short term," Cole said.
The yen recovered against the dollar, trimming the greenback's gains as the earlier risk-friendly mood in markets grew into something warier.
In morning trading Monday, the dollar was at Y100.84 from Y100.32 late Friday in New York, according to EBS.
The euro was at Y136.01 from Y135.25 and at $1.3489 from $1.3486.
The dollar was also at CHF1.1304 from CHF1.1315, while the pound rose to $1.4878 from $1.4822.
A report from BMO Capital Markets in Toronto said the dollar is likely to remain under pressure in the short term as safe-haven flows dissipate, although the global economy still remains vulnerable, and any "shocks to the system" could see a bid tone re-emerge.
News that North Korea had launched a long-range missile that could be part of a nuclear development program failed to have much impact on sentiment, despite concerns in Japan.
Analysts noted the yen had been under pressure anyway because of the rise in risk appetite, which made the resumption of carry trades more likely.
But the forthcoming Easter holidays could well ensure that any further yen losses are limited, with some analysts reckoning that the dollar will only make it as far as Y102 before profit-taking sets in.
RBC's Cole said the approach of Easter-related holidays later in the week in many jurisdictions and the fact that the major event risk posed by the U.S. nonfarm payrolls data last Friday has passed could keep trading flows in currency markets somewhat limited in the next few sessions.
The Australian and Canadian dollar are among the few currencies with significant challenges in the coming sessions, as they both face March jobs reports later in the week, and the Reserve Bank of Australia has a policy meeting on Tuesday, Cole said. Canada Morning
The Canadian dollar is one of the few major currencies showing substantial weakness against the U.S. dollar Monday morning, with weak building permits data for February apparently exacerbating the selling pressure on the Canadian unit.
Statistics Canada reported Monday morning that Canadian municipalities issued C$3.67 billion (US$3.0 billion) of building permits in February, down 15.9% from January for the fifth consecutive monthly decline.
BMO Capital Markets said some technical signals still point to further downside for the U.S. dollar, although the C$1.2000 area should still provide good support.
"To the topside, the C$1.2450 continues to build as resistance," it said.
The U.S. dollar is trading at C$1.2359 from C$1.2313 Friday.
-By Don Curren, Dow Jones Newswires; 201-306-2020;
don.curren@dowjones.com
(Nick Hastings in London contributed to this article.)