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Reuters - www.reuters.com
FOREX NEWS-Dollar falls vs euro, trades flat vs yen as G7 starts
FOREX-Dollar falls vs euro, trades flat vs yen as G7 starts
Fri Apr 13, 2007 4:09pm ET136
(Recasts, updates prices)
By Vivianne Rodrigues
NEW YORK, April 13 (Reuters) - The dollar fell to two-year lows against the euro on Friday amid concerns about U.S. economic growth and volatility at the start of a meeting of the Group of Seven rich nations.
The greenback also erased earlier losses against the Japanese yen after a G7 source said there would be no new comment on currencies in the group's communique expected for later in the day.
Finance ministers and central bankers from the Group of Seven richest nations are meeting in Washington at the annual spring meetings of the IMF and World Bank, fueling expectations among currency traders that the group would endorse further dollar weakness to address large trade imbalances between countries.
"It has been a volatile session with a lot of speculation about what the G7 is going to say about currencies and if they will comment about it at all," said David Watt, a foreign exchange strategist at RBC Capital in Toronto.
"In some ways, the remarks coming from the meeting could be interpreted as supportive to the dollar, but at the same time, we still have a lot of pessimism about the U.S. economy lingering on."
In late afternoon trading, the euro changed hands at $1.3530 , up 0.3 percent and near a two-year peak at $1.3554. The common euro-zone currency's lifetime high stands at $1.3670, according to electronic platform EBS. Continued...
The European currency extended gains versus the dollar after Yves Mersch, an ECB governing council member, said the euro zone can absorb a hard landing in the U.S. economy.
Mersch said that even if a U.S. hard landing weakened the dollar 10 percent against the euro, the impact would not be that big. For details, see [ID:nN13211017]
The dollar traded near flat at 119.18 yen , but was above its session trough of 118.22 yen. The euro was up 0.4 percent at 161.24 yen , near a fresh record high of 161.45.
A year ago, the dollar fell 7 percent against the yen in the space of a month after the G7 appeared to give the green light to a weaker dollar.
For the last several years, the G7 has stuck to boilerplate language regarding currencies: excessive exchange rate volatility is undesirable. Last year, the G7 included an annex to the official statement regarding global economic imbalances, but no new comments are expected.
"The market was a little concerned the G7 would address global imbalances and that would push the dollar weaker and the yen stronger," said Ken Landon, global currency strategist at JP Morgan Chase in New York. "But it looks there is nothing on that."
The G7 news on Friday helped the dollar reverse earlier losses against the yen suffered after a batch of weak U.S. economic data, including a report suggesting consumers were growing mgre pessimistic about the U.S. economy.
Lingering concerns about the health of the U.S. economy should keep pressure on the greenback in the weeks ahead, traders said.
"In the long run, people seem to be looking for places other than the U.S. and the dollar to park their money," said Brian Taylor, a senior currency strategist at M&T Bank in Buffalo, New York. (Additional reporting by Steven C. Jonhson and Gertrude Chavez-Dreyfuss)
Â© Reuters 2007. All Rights Reserved.
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