Dollar Pauses After Rally To 8-Month Highs
The dollar leveled off versus other majors on Friday, but remained near 8-month highs set during the previous session amid fears that a Greek default will spark a wider crisis in the Euro zone.
Although the European Central Bank could provide needed liquidity to Europe’s fragile banking system in the event of Greek restructuring, some doubt whether the region’s 17-nation monetary unit can withstand the crisis.
Finance ministers and central bank governors of the Group of 20 major economies promised to work together in dealing with the European sovereign debt crisis.
Markets remain unconvinced that a specific plan will be announced at the culmination of the G20 meeting on Saturday.
French market regulator Jean-Pierre Jouyet reportedly said that European banks may need to be recapitalized. Speaking in a French radio interview, AMF chief Jouyet said 15 to 20 banks in Europe need recapitalization. French banks do not need recapitalization at present, he added.
While U.S. economic indicators have been pointing the possibility of a double-dip recession for the world’s largest economy,the dollar has been boosted by its safe haven status.
The buck was steady at $1.35 versus the euro today, having touched an 8-month peak of $1.3394 on Thursday.
Choppy dealing left the dollar at $1.5450 versus the sterling after touching a yearly high of $1.5327 in the previous session.
The dollar rallied back above parity versus the Canadian loonie this week, and was hovering near C$1.03 in afternoon dealing.
There was no movement against the for yet another week, with the pair staying around Y76.30. The dollar touched a record low Y75.94 in August.
Gold futures slid under $1,700 an ounce, down more than $100 for the day, as traders looked to raise cash.
