The USD has eeked out across the board gains in Asian trade, EUR/USD down at 1.4030 from a North American close Friday around 1.4060, while cable is down at 1.6480 from around 1.6520. Sovereign selling of EUR/USD, and to a lesser extend EUR/JPY, was noted during Asian trade.

Comments from China’s central bank Governor Zhou Xiaochuan over the weekend, that there will no sudden change in China’s reserve policy, will have helped calm fears that the country was preparing to aggressively diversify away from the dollar.

Elsewhere Yu Dongming at NDRC’s metallergical department said China will not continue to buy metals for reserves in current market conditions.

Geopolitical developments in Iran and Honduras will also be lending the dollar a modicum of support.

Honduran President Manual Zelaya has been arrested by the army in a coup ordered by the country’s supreme court. Honduras is of strategic importance as it will be used as a pawn in the battle for influence in the region between the US and Venezuela’s Hugo Chavez.

Elsewhere 9 employees of the British embassy in Tehran have been detained by the authorities there, greatly ratcheting up tensions between Iran and the UK.