NEW YORK - The dollar traded mostly lower to open the new year Monday, as strong economic reports from the US and China encouraged riskier trades away from the safe-haven greenback.

The euro rose to US$1.4408 at 2200 GMT, from US$1.4323 in New York late on Thursday before the New Year holiday weekend.

Against the Japanese currency, the US unit fell to 92.53 yen from 93.00 on Thursday.

Market participants said the dollar was subject to profit taking after a strong run in December, and that positive US and Chinese manufacturing data bolstered hopes the worst of the global slump is over.

The strong data encouraged investors to seek out riskier but higher yielding currencies than the US unit.

"The broad selloff in the US dollar this morning indicates that risk appetite is driving price action in the foreign exchange markets," said Kathy Lien at Global Forex Trading.

Dealers said news that in December the US manufacturing sector was expanding at its fastest pace since April 2006 gave all markets a real boost, especially after the Chinese figures earlier in the day.

The Institute for Supply Management said its purchasing managers index rose to 55.9 percent in December from 53.6 percent in November, a fifth consecutive expansion and well above forecasts for 54.3 percent. Any number above 50 percent indicates growth.

"The sector may be benefiting from an excessive destocking cycle," said Norbert Ore, chair of the ISM survey committee.

Ian Shepherdson at High Frequency Economics said the ISM index "was propelled by a rebound in the new orders index, which tends to lead the other components and therefore suggests the January headline index will rise further.

Dealers said the market will likely now wait for Friday's key US employment report to see if the recovery is beginning to put a dent in the high levels of jobless.

"The big question this week is whether the US payrolls will rise for the first time in two years," Lien said.

"Many economists are optimistic and believe that job growth has returned. Although we are skeptical, we recognize that the price action in the dollar reflects this same sentiment."

The consensus forecast for Friday's report is for payrolls to be flat in December after a drop of 11,000 in November, following months of hefty job losses.

Wells Fargo analyst Nick Bennenbroek said traders are not sure of the dollar's trend for 2010.

"We had some distinct trends in 2009, for the most part we saw a weak US dollar, and we saw a negative correlation between the dollar and equities, and then in December we saw year end positioning, and a correction to that trend," he said.

"At the start of a new year we're trying to figure out what trend is more likely to appear in 2010."

In late New York trade, the dollar stood at 1.0301 Swiss francs after 1.0341 Thursday.

The pound was at US$1.6088 from 1.6168.