Traders cast eyes to Group of Seven gathering of finance ministers
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The dollar rose versus most major rivals Friday as traders moved to the sidelines ahead of a meeting of Group of Seven finance ministers.
The dollar index DXY +0.47% , which measures the U.S. unit against a basket of six major rivals, rose to 76.625, up from 76.284 late Thursday.
With Thursday’s speeches from President Barack Obama and Federal Reserve Chairman Ben Bernanke out of the way, “we now shift focus to the G-7 meeting, which kicks off today and concludes tomorrow,” said Adam Cole, global head of foreign-exchange strategy at RBC Capital Markets.
“Expectations of anything material coming out of the meeting have gradually deflated in recent days,” he noted, with officials quoted as saying no communique will be issued at the conclusion of the meeting.
Still, there may be some “residual hope” that officials “will put some meat onto their Aug. 9 pledge to ‘take all necessary measures to support financial stability and growth in a spirit of close cooperation, but specifics seem increasingly unlikely,” Cole said.
Overall market reaction to Obama’s jobs speech late Thursday night was restrained, analysts said. Obama urged a $440 billion package of tax cuts and other incentives he said would “jolt” the largest global economy back into growth.
The euro EURUSD -0.37% , meanwhile, continued to grind lower after breaching the $1.40 level on Thursday. The euro bought $1.3812 in recent action, down from $1.3884 in late North American trading Thursday.
The shared currency came under pressure after Jean-Claude Trichet, president of the European Central Bank, signaled that the bank’s cycle of interest-rate hikes had likely come to an end amid a moderating inflation outlook and intensifying downside risks to growth.
“We would not regard this as an indication that the ECB is about to ease, only that they are likely to remain on hold,” said Adrian Schmidt, currency strategist at Lloyds TSB in London. “But the continued concern about Greece maintains the negative euro tone.”
Also Friday, the British pound GBPUSD +0.02% traded at $1.5957, little changed from $1.5965.
The dollar rose to 77.84 yen versus the Japanese currency USDJPY +0.37% , up from ¥77.52.
William L. Watts is a reporter for MarketWatch in Frankfurt.
