The euro rose versus the dollar, erasing earlier losses as advances by U.S. stocks and commodities whetted investors’ appetite for riskier assets. The currencies of Norway, New Zealand and Australia, countries that export commodities, strengthened even as the Swiss franc, a haven currency, gained versus 13 of its 16 major counterparts. The yen rose against the dollar after data showed the U.S. economy grew less in the first quarter than previously calculated and amid speculation the Group of 20 will fail to agree this weekend on how to tackle Europe’s debt crisis. “What you’re seeing is investors thinking longer term and realizing with the poor data, and following up with the Fed and their dovish comments and the poor housing numbers, it slows interest rates going forward -- and that will weaken the dollar versus the euro,” said John Doyle, a strategist in Washington at currency-trading firm Tempus Consulting Inc. The euro gained 0.4 percent to $1.2383 at 4:19 p.m. in New York, erasing a decline for the week. Earlier it fell 0.6 percent. The yen was little changed at 110.56 per euro after weakening as much as 0.3 percent and gaining as much as 0.8 percent. The Japanese currency rose against the dollar 0.4 percent today and 1.6 percent this week, to 89.29 yen. The revised increase in U.S. gross domestic product was smaller than the median forecast of economists surveyed by Bloomberg News and compared with a 3 percent estimate issued last month, Commerce Department data showed. “Less Supportive’ The Federal Reserve said in a policy statement on June 23 that the pace of the economic recovery is “likely to be moderate for a time.” Financial conditions have become “less supportive of economic growth,” it said. The central bank held the target interest rate for overnight lending between banks at a record low zero to 0.25 percent, where it has been since December 2008 to help spur the economy. Reports this week showed U.S. new-home sales dropped to a record low annual pace of 300,000 in May and sales of existing homes unexpectedly declined, falling 2.2 percent. The Standard & Poor’s 500 Index rose as much as 0.9 percent before paring gains to 0.3 percent. Crude oil futures increased the most in two weeks, gaining as much as 3.4 percent to $79.13 a barrel in New York before trading at $79.02. The Reuters/Jefferies CRB Index of raw materials rose 1.5 percent. Japan’s currency gained this week against 15 of its 16 most-traded peers as investor appetite for riskier assets ebbed. The yen may rise further against the dollar as Japanese investors slow foreign bond purchases, Deutsche Bank AG said. “While the heavy purchases continued last week, in the most recent week they have slowed significantly,” strategists led by Bilal Hafeez in London wrote in a research report today. “This slowdown in outflows should allow the yen to strengthen.” G-20 Leaders G-20 leaders meet in Toronto tomorrow through June 27 to discuss policies aimed at addressing Europe’s crisis, spurring global growth and overhauling financial regulation. Germany and the U.S. have been at odds on whether debt reduction or stimulus should take precedence, with Chancellor Angela Merkel this week saying Europe’s debt levels have to be lowered because they are one of the main causes of the crisis. The meeting is also expected to discuss proposals for a global bank levy and a tax on securities transactions to clamp down on financial speculation. “There’ll probably be some sort of agreement on the bank tax,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “That could be poor for equity markets, so that would be good for safe-haven currencies like the dollar and the yen.” Yuan Climbs The yuan had its biggest weekly gain since December 2008, rising 0.5 percent to 6.7921 per dollar, after the People’s Bank of China said June 19 it would end a two-year peg to the dollar. President Barack Obama said it’s too soon to say whether China’s move will be sufficient to rebalance the world economy. He and Chinese President Hu Jintao are scheduled to meet tomorrow at the G-20 summit. “This week we started with a little jubilation over the Chinese announcement,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “The market was very quick to catch on what the real meaning was the behind the move, which was to deflect criticism and refocus attention away from them.” Swiss Franc The Swiss franc gained to the strongest against the euro since the single currency’s debut after the central bank said the risk of deflation has largely disappeared. The franc touched 1.3457 per euro before trading at 1.3539, up 0.4 percent. Sterling rose against most of its counterparts amid optimism an emergency budget announced June 22 by Chancellor of the Exchequer George Osborne would cut the nation’s deficit and enable Britain to keep its top credit rating. The pound rose 0.8 percent to $1.5060 and gained 1.6 percent for the week. South Korea’s won fell for a fourth day, the longest run in three months, as overseas investors cut holdings of the nation’s stocks. The won slid 2.1 percent to 1,215.19 per dollar. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net.

Source