The dollar is continuing its recovery at the start of the week as a report cited upbeat news on employment in the US and the Federal Reserve Bank looks set to hold interest rates at its next meeting.

This morning the dollar was at 1.3199 to the euro and at 1.9529 to the pound sterling.

A labour department report on Friday showed companies took on more workers than expected in November, reducing expectations of an interest rate rise when the Federal Reserve meets tomorrow.

"The market will pay more attention to the Fed after the very strong payrolls," Jonathan Cavenagh, a currency strategist at Westpac Banking told Bloomberg.

"There's an expectation the Fed will still be hawkish. The risk is the US dollar's run has a little further to go."

Several economic reports are due out this week that are predicted to show figures in support of the dollar.

Together with the rate decision, on Tuesday trade deficit figures for October are released that are forecast to show a fall from $64.3 billion to $63 billion.

Also this week, US treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke will visit China to discuss currency flexibility and global trade imbalances, both topics that could have an impact on the markets.