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Forex - Dollar gains as G20 sidesteps criticizing Japan, Draghi cautions

Published 02/18/2013, 03:57 PM
Updated 02/18/2013, 03:58 PM
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Investing.com - The dollar rose against most major currencies on Monday after a G20 meeting of economic policymakers concluded with no criticism of Japan for its weakening currency.

A somewhat sober assessment of the European economy from European Central Bank President Mario Draghi also fueled demand for the safe and liquid greenback as well.

In U.S. trading on Monday, EUR/USD was down 0.08% at 1.3352.

A G20 summit wrapped up with a statement issued that did not censure Japan or accuse it of actively devaluing the yen.

Prime Minister Shinzo Abe has called for looser monetary policies in an effort to prioritize growth over keeping inflation rates in a tight range, and a G20 statement that did not single out Tokyo or any other nation on accusations of failing to allow markets to set exchange rates gave investors the green light to continue shorting the yen, which pushed up the dollar as did a Draghi's comments.

Draghi told the European Parliament earlier that Europe "entered 2013 in a more stable financial environment than in recent years" thanks to various economic reforms, though he warned that eurozone economy remains weak following three quarters of contraction and will only recover slowly this year.

Last week, Eurostat, the statistical arm of the European Union, reported that the eurozone's GDP contracted by 0.6% in the fourth quarter of 2012 from the third, well beyond expectations for a 0.4% decline and far surpassing g the previous 0.1% quarterly contraction.

The dip in total output represented the fastest rate of decline since 2009 and marked a third consecutive quarter of contraction.

The annualized GDP rate fell 0.9%, worse than expectations for a 0.7% contraction, after shrinking at an annualized rate of 0.6% in the previous quarter.

Trading was quiet as U.S. markets were closed for the President's Day holiday.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.33% at 1.5466.

The dollar firmed against the yen, with USD/JPY trading up 0.50% at 93.97 and rose against the Swiss franc, with USD/CHF trading up 0.21% at 0.9235.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.41% at 1.0110, AUD/USD down 0.14% at 1.0297 and NZD/USD trading up 0.11% at 0.8456.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% at 80.72.






 

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