By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar slipped versus most major currencies Friday, with the euro gaining as investors anticipated further assurances on efforts to rein in Europe’s sovereign debt crisis from a meeting of officials from the Group of 20 nations.
The dollar index DXY -0.41% , which measures the greenback against a basket of six currencies, fell to 76.797 from 76.978 in North American trade late Thursday.
The euro EURUSD +0.54% rose to $1.3847, up from $1.3785.
The shared currency was lower in Europe trading after Standard & Poor’s cut its credit rating on Spain. Read about Spain’s downgrade.
“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,” said Kathleen Brooks, research director at Forex.com.
Economists said hopes G-20 finance ministers and central bankers 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.
“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.
This week, the dollar has lost 2.4%, the swiftest drop since September 2010.
After being nearly flat on the year a week ago, the euro has jumped 3.5% -- it’s fastest rise since August 2010.
U.S. stocks, data
U.S. stocks rose, with the S&P 500 Index SPX +1.10% up 1% after a bigger-than-expect increase in U.S. retail sales in September. Read about U.S. retail sales.
Treasury prices also fell, pushing benchmark 10-year yields 10_YEAR +1.47% up towards their highest levels seen since late August. Read about Treasury bonds.
The data should alleviate fears that the U.S. is headed back into a recession, said Michael Woolfolk, senior currency strategist at Bank of New York Mellon. “Market sentiment had become too pessimistic and fear was beginning to feed on itself.
“That said, nothing fundamental has changed,” he said. “The U.S. and European debt crises remain, and are guaranteed to keep uncertainty high for the remainder of the year. As such, the current rally in the euro and other non-dollar currencies should not be mistaken for an improvement in the fundamentals of these currencies.
Aussie dollar, Japanese yen
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 +1.13% added to gains Friday, rising 1.4% versus the U.S. unit to $1.0301.
The British pound GBPUSD +0.25% traded at $1.5804 versus $1.5779.
Against the Japanese yen, the dollar USDJPY +0.56% rose to 77.38 yen, up slightly from ¥76.85 late Thursday.
The pound tends to gain and the yen tends to decline when investors shift towards riskier assets.
