MW: Dollar gains on euro ahead of G-8, G-20 meetings
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- The dollar gained against the euro on Friday, ahead of meetings of the Group of Eight and Group of Twenty leading industrialized nations in Toronto that are expected to focus on efforts to support economic growth while minding the problems that can follow oversized deficits.
The euro (CUR_EURUSD 1.2289, -0.0037, -0.3002%) bought $1.2301, compared with $1.2333 in late North American trading on Thursday. The shared currency fell as low as 41.2253 during European trading hours.
The dollar index (DXY 85.80, +0.07, +0.08%) , which tracks the U.S. unit against six major counterparts, rose to 85.770 from 85.730 late Thursday.
Against the Japanese yen, the dollar (CUR_USDYEN) rose to ¥89.44 from ¥89.43.
"The conflict this weekend in G-20 is simple to understand," said Andrew Brenner, head of emerging markets at Guggenheim Securities. "On one side, you have all the European governments talking about austerity and worried about their credit ratings in the short term.
"On the other hand, you have the U.S. argument of expanded use of deficit spending to stimulate the world economies," he said. "We don't see how this gets resolved this weekend."
G-8 will focus its meetings Friday on security and development, especially the health of mothers and children. The G-20 sessions will discuss policies on energy, climate change and trade, as well as peace and security. Read G-8, G-20 preview.
The dollar held gains in early trading Friday after the U.S. released revised data showing its economy grew 2.7% in the first quarter, down from the previous estimate of 3%. Read about U.S. GDP revision.
U.S. consumer sentiment was the most optimistic in more than two years in June, but remained far below normal levels, according to a survey released Friday by Reuters and the University of Michigan. The UMich index rose to 76.0 in late June, up from 73.6 in May and 75.5 in mid-June - where economists surveyed by MarketWatch anticipated it would stay. Read more about UMich sentiment report.
China factor
One topic considered a hot point of contention for the G-20 a week ago has been removed, though. Analysts said there will be little time spent, at least officially, discussing the need for China to allow its currency to appreciate after the People's Bank of China said last weekend it would implement a more flexible regime for the yuan.
China's central bank set the midpoint of its daily trading range for the U.S. dollar at 6.7896 yuan Friday, a record low.
The People's Bank of China's daily official rate -- from which the greenback is permitted to rise or fall a maximum of 0.5% -- compared to a 6.8100 yuan rate set Thursday.
The U.S. dollar fell versus the euro on Thursday, after stocks headed south following a report on jobless claims and mildly better-than-expected data on U.S. durable-goods orders. See Thursday's Currencies report.
