LONDON (MarketWatch) - A weekend meeting of leaders from the world's top developed and emerging economies had little impact on currency markets Monday, strategists said, with the dollar mostly lower in choppy market conditions.
Fears over the depth of a global economic slowdown and ongoing uncertainty over the financial sector continued to hang over equity markets and to weigh down risk appetite in the wake of the weekend summit of leaders from the Group of 20 nations.
The summit saw leaders agree to take "whatever further actions are necessary" to stabilize markets, while opening the door to broader regulation of the financial sector. See full story.
In the end, markets viewed the meeting as "long on rhetoric and short on substance," said Daragh Maher, currency strategist at Calyon Bank.
But there was little expectation that the meeting would produce a dramatic, instant solution to economic and financial woes, he said.
The dollar index , a measure of the greenback against a trade-weighted basket of six major currencies, fell back to 86.929 from around 87.392 in North American activity late Friday.
The euro rose to $1.2625 against the dollar from around $1.2596.
The single European currency lost ground against its Japanese counterpart, slipping to 121.87 from around 122.15 yen.
The dollar lost ground to the yen, trading at 96.53 yen in recent action.
Japanese gross domestic product shrank 0.1% in the July-September period. That marks the second consecutive quarterly decline and meets a commonly used definition of a recession as declining overseas demand for the nation's goods hurt its export-dependent industries. See full story.
Tokyo's Nikkei index erased early losses to end the day higher. See Asia Markets.
"Lately, equity markets have been relatively stable and could continue to trade sideways in the near-term," wrote strategists at BNP Paribas. "However, the underlying theme of risk aversion remains ... suggesting that rallies in dollar/yen will be capped."
In fact, price action indicates Japanese exporters are sellers of dollar/yen on rallies, they said.
Pound rebound
The British pound, meanwhile, rebounded strongly against the U.S. dollar, jumping more than 1% to $1.4913, and gaining around 0.6% versus the euro to 84.81 pence.
The pound fell sharply last week, hitting six-year lows versus the dollar. Sterling tumbled to its lowest point ever against the euro since the debut of the single currency nearly a decade ago.
Fears about the fate of the British economy, which remains heavily exposed to the financial sector, along with the Bank of England's unexpectedly aggressive cuts in interest rates earlier this month served to leave the currency under pressure.
But the pound on Monday shrugged off further economic gloom, including data showing a further, steep drop in asking prices for British houses. See full story.
Calyon's Maher said sterling's rebound, particularly against the greenback, reflected ideas that the pound's recent losses were overdone.
"I don't think anyone's view on sterling has changed. I think if you asked anybody where you thought it would be in a month's time, they'll say weaker, certainly against the dollar," he said.
Against the euro, however, questions about the depth of the euro-zone's economic woes and fears the European Central Bank is well behind the curve on monetary easing could buoy sterling, Maher said.
