G-20 finance ministers will meet in Paris on Friday and Saturday
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar slipped versus most major rivals Friday, while the euro was steady as investors awaited a meeting of finance ministers and central bankers from the Group of 20 industrialized and developing nations for further clues on efforts to rein in Europe’s sovereign debt crisis.
The dollar index DXY -0.13% , which measures the greenback against a basket of six currencies, slipped to 76.960 from 76.978 in North American trade late Thursday.
The euro EURUSD +0.19% changed hands at $1.3791, up a shade from $1.3785. The shared currency slipped in earlier action after Standard & Poor’s cut its credit rating on Spain.
“There is definitely a Friday feeling to the markets, with one eye on prices and the G-20 and the other on weekend plans. However, [risk-related assets are] still higher today, led by forex as has been the case during the last few sessions,” said Kathleen Brooks, research director at Forex.com.
Economists said hopes G-20 officials will deliver a “big bazooka” to battle the crisis remain low. The focal point for the two-day meeting which gets under way in Paris Friday are calls by emerging-market countries to boost the International Monetary Fund’s lending power, potentially giving it more power to fight off the crisis in Europe and avert a global slowdown. Read more about the G-20 meeting.
An emphasis by European leaders on recapitalizing banks, tackling larger haircuts for Greek bondholders and further enhancing the firepower of the euro-zone bailout fund, the European Financial Stability Facility, have helped revive risk appetite, analysts said.
“There are two outcomes: either bulls are proven right and those that bought the bottom of the market picked up some great bargains, or we are in for a major disappointment,” Brooks said.
“Time will tell. But today the markets seem to be happy with news that cash-rich emerging-market countries are in talks with the IMF to create a special euro-zone rescue fund,” she said.
The return of risk appetite has fueled a dramatic rebound by the Australian dollar since earlier this month, when the currency changed hands at a 13-month low near 94 U.S. cents.
The Australian dollar AUDUSD +0.51% added to gains Friday, rising 0.8% versus the U.S. unit to fetch $1.0234.
The British pound GBPUSD +0.10% traded at $1.5764, down slightly from $1.5779. The dollar rose to 77.03 Japanese yen USDJPY +0.25% , up from ¥76.85.
William L. Watts is a reporter for MarketWatch in Frankfurt.
