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		Home Page We're about Mortgage News You Can Use   Dollar Trade Choppy Before G7 Meeting By Manuela Badawy, 1/26/2004 NEW YORK (Reuters) - The dollar was steady against the euro but weaker versus the yen on Monday in choppy trade as European and U.S. officials articulated their stances ahead of next week's meeting of the Group of Seven industrial nations. European politicians expressed mixed opinions on the need for action to curb volatile exchange rates but the United States seems unperturbed by the dollar's precipitous decline. U.S. Undersecretary for Trade Grant Aldonas said in Paris Washington is comfortable with a weaker dollar and the G7 would be better off focusing on fundamentals than exchange rates. "One of the reasons for the choppiness today, is because of a fairly steady stream of comments coming out of the euro zone on the currency, and the clarification on the ECB that Trichet didn't talk to the EU finance ministers about interest rates last week," said Nick Bennenbroek, foreign exchange strategist at Brown Brothers Harriman & Co. in New York. The European Central Bank denied on Monday French Finance Minister Francis Mer's comment at the weekend that ECB President Jean-Claude Trichet discussed interest rates in a meeting with euro zone finance ministers last week, sending the euro briefly higher. "I don't think markets are particularly active. The market is focusing more on these (politicians') comments than they would do otherwise simply because there is nothing going on and because the markets are a little thin," Bennenbroek said. Early Monday in New York, the euro was trading steady against the dollar to $1.2584 <EUR=>. The dollar weakened against the yen on Monday after the Japanese Finance Ministry reported that its trade surplus expanded for the fifth time in six months in December and on commercial selling and exporters' demand for yen. The dollar fell to 105.98 <JPY=> yen, shedding more than half a percent. The yen scored three-year highs versus the dollar just beyond 106 earlier this month. The head of Japan's largest business lobby said on Monday that he hoped the Bank of Japan will intervene in the currency market if the dollar fell below 105 yen because most companies have said their assumed dollar/yen rate is 105 to 110 yen. WHAT WILL THEY SAY? European officials seemed to give conflicting statements regarding the dollar's need to strengthen to prevent a crisis but not at their expense or too rapidly. Dutch Finance Minister Gerrit Zalm said: "Our main concern is especially rapid movements of the euro" but he declined to comment on interest rates. Spain's Economy Minister Rodrigo Rato said an abrupt foreign exchange market correction could be dangerous but that a strong and stable euro was useful for the euro zone economy. G7 finance officials, known as sherpas, are meeting in Brussels on Monday as part of a wider meeting of G10 officials and academics. It was unclear whether they would be meeting separately in preparation for the Feb. 6-7 G7 gathering. No statement was expected from the meeting. The market is also keenly awaiting a two-day Federal Open Market Committee meeting starting on Tuesday. Although the U.S. Federal Reserve is not expected to change its monetary policy, traders will scrutinize the wording of the statement it issues after the meeting on Wednesday for clues on whether the Fed may hike rates later in the year. Fed Chairman Alan Greenspan is expected to take part via videolink in a conference in London hosted by UK Chancellor of the Exchequer Gordon Brown. December's report of sales of existing U.S. homes is due to be released by the National Association of Realtors at 10:00 a.m. EST (1500 GMT). (Additional reporting by Justyna Pawlak in London) © Copyright 2004 Reuters. Reuters content is the intellectual property of Reuters or its third-party content providers. Any copying, republication, or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.   Back to Original Article: Mortgage News You Can Use   Continue with: Major business and economic events Economic growth could be derailed by soaring energy prices
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