By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar edged higher versus the euro but lost ground to some higher-yielding currencies Monday, with investors showing a modest pickup in risk appetite after leaders of the Group of 20 industrial and emerging economies shifted their emphasis to deficit reduction at a weekend meeting in Toronto.
The G-20 leaders reached an agreement on common goals for deficit and debt reduction Sunday, but did not address currencies directly. See full story on G-20 meeting.
"Given the relatively tame outcome of the G20 meeting it is not surprising that investors have not expressed significant fears over new rounds of fiscal tightening, which was the main pronouncement of the summit. Equity markets across Europe are trading on firm ground and risk currencies are also finding bids, though ranges remain tight," wrote Geoffrey Yu, currency strategist at UBS, in a note to clients.
The euro (CUR_EURUSD 1.2343, -0.0029, -0.2344%) edged lower versus the U.S. dollar to change hands at $1.2336, down from $1.2380 in North American trade late Friday. The single currency has largely remained in a holding pattern through European trade.
The high-yielding Australian dollar (CUR_AUDUSD 0.8740, +0.0001, +0.0114%) edged off an earlier gain in Asian trade, changing hands at 87.34 U.S. cents, down 0.1% on the day. The greenback was off 0.1% versus its Canadian counterpart (CUR_USDCAD 1.0346, -0.0008, -0.0773%) at C$1.0344.
"The initial reaction in the currency markets [to the G20 meeting] was mildly pro-risk with euro and cable (British pound versus the dollar) rising at the start of the Asian open," said Boris Schlossberg, director of currency research at GFT.
However, by early European morning trade much of investor appetite for higher volatility currencies waned and the euro dropped, with this week's outlook to be largely determined by U.S. and European data.
"If the news continues to surprise to the downside, safe haven flows will likely resume with U.S. dollar and yen rallying further as enthusiasm for the risk trade fades along with the hopes to contain deficit spending," he said in a note to clients.
The British pound (CUR_GBPUSD 1.5056, +0.0003, +0.0199%) was little changed versus the Greenback at $1.5061. The euro fell 0.3% against sterling to trade at 81.92 pence.
Against the Japanese yen, the dollar (CUR_USDYEN) edged up to ¥89.36 from ¥89.27 in late North American trading on Friday.
The dollar index (DXY 85.46, +0.14, +0.17%) , which tracks the U.S. unit against six major counterparts, was at 85.426, compared to 85.342 late Friday.
