Euro taps lowest vs. dollar since February with G-7 meeting in focus By Myra P. Saefong and William L. Watts, MarketWatch SAN FRANCISCO (MarketWatch) — The dollar rose Friday, with the euro under further pressure after the European Central Bank said Juergen Stark, a member of the Executive Board and Governing Council, will step down amid reports of disagreements over the bank’s bond-buying program. Traders also awaited news from a meeting of the Group of Seven finance ministers currently underway in Marseille, France, that will carry into the weekend. The dollar index DXY +1.24% , which measures the U.S. unit against a basket of six major rivals, rose to 77.175, up from 76.284 late Thursday. Earlier, the index touched 77.183, its highest level since March. Read blog on the surge past the 200-day moving average. The euro EURUSD -1.41% , meanwhile, continued to grind lower after breaching the $1.40 level on Thursday. The euro bought $1.3672 in recent action, down from $1.3884 in late North American trading Thursday. It traded as low as $$1.3641, the weakest level seen since February. The European Central Bank said Friday that Stark was leaving his post by the end of the year for “personal reasons.” But news reports have tied the move to disagreements over the bank’s bond-buying program. Read more about Stark’s resignation. “Stark’s resignation suggests there is a major policy split and that the doves seems to be winning out,” said Brian Dolan, chief currency strategist at Forex.com, in emailed comments. This scenario is seen as a negative for the euro, he wrote. Overall, the weakness in the shared currency is “mostly a continuation of the risk-off selling we’ve been seeing all week, as pessimism over the outlook intensifies,” Dolan said. “Going into the weekend, there may also be some additional selling of risk assets on the potential for a terror attack on the 10th anniversary of 9/11.” Also Friday, the British pound GBPUSD -0.54% traded at $1.5855 from $1.5965 late Thursday. The dollar fell back to 77.28 yen versus the Japanese currency USDJPY -0.07% , down from ¥77.52. Prospects for Group of Seven With Thursday’s speeches from President Barack Obama and Federal Reserve Chairman Ben Bernanke out of the way, currency traders “now shift focus to the G-7 meeting,” 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 had come under pressure earlier Thursday 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.” Myra Saefong is a MarketWatch reporter based in San Francisco. William L. Watts is a reporter for MarketWatch in Frankfurt.

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