Saturday, October 23, 2010

The Dollar sat tight on early trade on Friday as the G20 meeting commenced

The Dollar sat tight on early trade on Friday as the G20 meeting commenced, as investors doubt will yield much progress on the problematical issue of currency depreciations. The Dollar appeared weaker though, after the U.S Treasury Secretary Tim Geithner commented on what G20 finance officials can do to fix economic imbalances and currency devaluations. Geithner stated that G20 nations should not weaken or prevent appreciation of undervalued currencies and that emerging economies with undervalued currency and solid reserves must adjust their currency value with fundamentals. Euro climbed after the comments, touching an intra-day high of 1.3971 from 1.3925 versus the dollar.

Dollar versus the Yen slipped to 81.09, still holding above its latest 15-year low of 80.84 yen set this week and keeping away from its record post-war low of 79.75 set in 1995. The market is unsure about what Japan’s tactics are on the currency and how afraid it should be. But clearly investors are not comfortable with putting fresh short positions from here.

The forex trading prices of the Australian Dollar rose against a weaker U.S dollar on Friday as G20 finance ministers met. The Aussie climbed to a high of 0.9839 from 0.9783 versus the dollar, after Tim Geithner said to the G20 finance chiefs that nations should neither try to weaken their currencies or stand in the way of gains. The rise of the Aussie was also helped by Friday’s data that showed a surprisingly strong 7.8 percent rise in export prices in the third quarter, even though buoyant trade emphasized on inflationary risks and argued for higher interest rates in the following months.

Gold bounces on Friday, after hitting a two-week low on Thursday as a drop in U.S initial jobless claims and a stalled euro rally spurred selling. Gold was about 4 percent below a lifetime high around 1,387 an ounce hit last week, losing its appeal as a safe investment as the dollar regained strength despite anticipation of further U.S monetary easing.

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