Friday April 11, 2008 - 11:49:13 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar slides on weak GE earnings, G7 awaited
(Changes byline, updates prices, adds quotes)
By Naomi Tajitsu
LONDON, April 11 (Reuters) - The dollar fell broadly on
Friday, extending losses after disappointing quarterly results
from U.S. industrial conglomerate General Electric fanned
worries about the U.S. economy.
The dollar's slide was particularly pronounced versus the
yen as GE's results knocked a tentative pickup in risk appetite.
Meanwhile, the euro closed in on this week's record high,
supported in part by speculation that Group of Seven financial
officials may not make a coordinated effort to talk up the
dollar when they meet later in the day.
GE reported an unexpected 6 percent drop in profits -- with
earnings per share undershooting expectations by 15 percent --
citing the slumping U.S. economy and global credit crisis that
started in August last year. [nWNAS7458]
"The recent improvement we've seen in risk appetite in the
market remains built on very fragile ground. Clearly there's
still great concerns over U.S. earnings coming out in the coming
quarter," said Lee Hardman, currency economist at BTM UFJ.
He added that currencies like the yen would likely rise in
the coming months as the recent pick up in risk appetite
continued to dissipate.
The dollar fell 0.5 percent to 101.17 yen <JPY=> shortly
after GE's announcement. The euro was up 0.6 percent at $1.5838
<EUR=> nearing a record high of $1.5902 hit in the previous
session, according to Reuters data.
The euro hit a record high versus sterling at 80.34 pence
Investor focus was turning towards the G7 meeting in
Washington and speculation that efforts to mend global financial
markets may continue to take priority over currency volatility.
"Official comments on currencies seem to have died down a bit
before the meeting, with the exception of Trichet yesterday,"
said Simon Derrick, head of currency research at Bank of New
"The likelihood is that were will be no change to the
The euro was also supported by European Central Bank
concerns about inflation, which had prompted it to hold interest
rates at 4 percent on Thursday and will likely prevent it from
cutting for a while.
The euro has gained nearly 9 percent against the dollar
since the start of this year on the view that the single
European currency will maintain its yield advantage, given that
many do not anticipate an ECB rate cut until at least summer.
By contrast, the Federal Reserve is seen cutting rates
further from 2.25 percent.
Analysts said U.S. officials were unlikely to call for a
pause in the dollar's plunge, given that a weak dollar at the
moment is not seen exacerbating weakness in the U.S. economy.
On the data front, investors were awaiting the
Reuters/University of Michigan's consumer sentiment survey due
at 1355 GMT, given that consumer optimism about the economy has
The preliminary reading for April's index is expected to
come in at 69.0, compared with 69.5 in March.
(Additional reporting by Toni Vorobyova and Veronica Brown;
Editing by Ruth Pitchford)
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