Friday June 12, 2009 - 10:47:40 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar edges up, investors eye G8 meeting
* Dollar index up 0.3 pct, traders book profits
* G8 meet in focus, ministers to discuss exit strategies
* Optimistic global economy view may pressure dollar more
(Adds comment, details, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, June 12 (Reuters) - The dollar edged up against a
basket of currencies on Friday, recovering as traders booked
profits from the U.S. currency's slide earlier this week, while
investors awaited a G8 finance ministers meet later in the day.
The euro hit the day's low against the dollar after European
shares initially slipped in early trade. This helped the U.S.
currency to recover from losses on Thursday, when improving U.S.
economic data stoked risk demand and prompted dollar selling.
The dollar has been on the back foot during a week of fairly
volatile trade, and is set to end the week 1.3 percent lower
against a currency basket after investors reassessed speculation
that U.S. interest rates may rise from near zero by year-end.
Analysts said that trade would be subdued as few European
economic data and events were due on Friday, while investors
would focus on comments that may come out of the G8 gathering.
Sources have said that currencies would not be a major point
of discussion at the two-day meeting, but a German official said
that eventual exit strategies from policies to deal with the
financial crisis will be a topic. [ID:nLB661036]
"We've been swinging back and forth quite a bit this week
... With the G8 in front of us, it may offer a good excuse not
to engage to heavily in the market at the moment," said Dag
Muller, technical analyst at SEB in Stockholm.
Market participants said that finance ministers would likely
promote the idea that the global economy is on the path to
recovery, which may prompt more demand for riskier assets.
"(The finance ministers) may underpin positive sentiment in
the market ... if you think the dollar is tightly linked to risk
appetite, then this would be dollar negative."
By 0806 GMT, the euro traded 0.2 percent lower at $1.4070,
after slipping to a session low around $1.4055, still above the
week's low of $1.3803 hit on Monday.
The dollar index .DXY, which tracks the currency's
performance against six major rivals, edged up 0.2 percent to
Against the yen, the dollar <JPY=> was at 97.92 yen, up 0.4
percent on the day.
Sterling <GBP=D4> was down 0.4 percent at $1.6510, but was
on track to end the week more than 3 percent higher as signs of
a UK economic recovery have boosted the pound this week.
An improvement in data on U.S. initial jobless claims and
retail sales on Thursday had stung the dollar as traders saw the
releases as evidence that the economy is improving. Speculation
of a recovery has been raising the market's appetite for
currencies seen as being higher risk, such as sterling.
Some analysts said the dollar was supported after a solid
auction of 30-year U.S. Treasuries helped to convince investors
that demand for U.S. assets remains intact despite concerns
about Washington's fiscal position and Russia's announcement
this week that it will cut the share of Treasuries in its
The dollar has suffered this week, unable to hold rallying
momentum after last week's U.S. jobs data showed the pace of job
losses slowed sharply in May and stirred talk that the Federal
Reserve may raise interest rates later this year.
Many traders and economists are sceptical that such a rate
rise will take place, and U.S. two-year Treasury yields have
backed down from seven-month highs hit earlier in the week.
(Reporting by Naomi Tajitsu; editing by Toby Chopra)
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