The dollar drifted down near last week's three-year lows versus the yen on Monday but was pulling back slightly from levels near all-time lows against the euro as markets geared up for a data-packed week.

With holidays in Tokyo and New York sapping trade, markets were looking ahead to a U.S. data deluge that begins in earnest with U.S. retail sales data on Wednesday and ends on Friday with the University of Michigan's October consumer sentiment reading.

Investors also wondered what President Bush's Asian trip later this week would bring on the currency front after the Group of Seven nations' call last month for currency flexibility set off the dollar's recent tailspin.

That call, seen aimed at Japan, China and other Asian nations which limit currency strength against the dollar, ignited worries about the huge U.S. trade deficit. Those concerns may make it difficult for the dollar to get a boost even if this week's data proves upbeat.

"I would think generally this is not going to be a great week for the dollar again, even though we're going to see some good releases both on the supply and demand side in the U.S.," said Mitul Kotecha, head of global foreign exchange research at Credit Agricole Indosuez.

"It still seems to me markets are ignoring or have fully discounted this cyclical recovery in the U.S. and are now much more focused back on the structural negatives that remain a key burden on the dollar."

By 0745 GMT, the dollar was down 0.18 percent on the day against the yen at 108.43 yen and facing three-year lows at 108.23.

The dollar was up half a percent against the euro at $1.1734 -- but just a little more than two cents stronger than its all-time lows.

MISUNDERSTANDING

The dollar was boosted by European Central bank President Wim Duisenberg's comments that markets may have misunderstood the recent G7 statement if they thought it was a signal for the greenback to weaken against the single currency.

Asked whether markets had started selling dollars too aggressively after the statement, Duisenberg said the statement was meant to plead for a more even burden-sharing among many currencies.

"There was no statement specifically about euro-dollar, that was maybe misunderstood," Duisenberg told reporters on the sidelines of a news conference in Moscow.

"Duisenberg's point is that the G7 statement was not directed at Europe so much as Asia. Although the market had already suspected this, Duisenberg is drawing attention to this issue," said Neil Parker, market strategist at Royal Bank of Scotland Financial Markets.

Thin volume was expected on Monday because of the Columbus Day holiday in the United States, with government offices, banks and fixed-income markets closed, after Japan was shut for the Health Sports Day holiday.

ASIAN FOCUS

Talk that President Bush would press Chinese President Hu Jintao to revalue the yuan when they meet later this month also kept focus on the weak dollar theme, though no immediate action was expected to result.

Bush and Hu will meet at the Asia Pacific Economic Cooperation meeting in Bangkok on October 20-21 just days after the U.S. president visits Japan where he is also expected to raise the issue of exchange rate manipulation.

On Sunday Japan's Economics Minister Heizo Takenaka reiterated his view that the main purpose of Tokyo's massive intervention this year was to slow the speed of the yen's moves.

Markets see this as implying Tokyo may accept that the yen may rise further in coming months.

"I think the yen is going to stay strong." said Patrick Bennett, a strategist with Commerzbank in Singapore.