The dollar held steady against the euro on Friday, taking a pause from its recent rally ahead of a Group of Seven (G7) meeting, data on U.S. durable goods orders and a host of Federal Reserve speakers. Meanwhile the yen recovered after dropping briefly to a one-month low around 131.00 per euro after German-American carmaker DaimlerChrysler said it would sell its 37 percent stake in Mitsubishi <7211.T>, worth around 175 billion yen. With the dollar trading about 10 cents above February's record lows against the euro, currencies are expected to be less of an issue at this meeting than in February when the G7 decried "excess volatility" and urged greater exchange rate flexibility in some economic areas.
"The market expects nothing from the G7 -- the same message on foreign exchange that came out of the last G7 meeting in Florida. If anything things have panned out nicely, everybody is quite pleased," said Niels Christensen, strategist at Societe Generale in Paris. At 0755 GMT, the euro was barely changed on the day at $1.1890 , up from a five-month low below $1.1800 set on Thursday, and it traded at 129.95 yen , down a quarter percent on the day. The dollar was slightly weaker on the day at 109.24 yen . Dealers focused on the 1230 GMT March durable goods release to gauge inflation and awaited any indications from Fed speeches later that U.S. interest rates could be headed higher after Chairman Alan Greenspan's Congressional testimony this week did nothing to dampen expectations of hikes later this year.
"Durable goods orders are always a release that can be quite volatile and bring a surprise. Today you can't exclude that but after all the volatility surrounding the Greenspan testimonies this week the market is a bit tired," Christensen said. Economists expect the March durable goods orders to show a 0.8 percent rise, or an increase of 1.1 percent excluding transportation orders. Richmond Fed President Alfred Broaddus speaks at 1630 GMT and Fed Board Governor Ben Bernanke at 1815 GMT.
DATA, MONETARY POLICYMAKERS
European Central Bank President Jean-Claude Trichet told the Financial Times in an interview released on Friday the bank was getting mixed signals about the euro zone economy but that risks to price stability were balanced. Trichet is due to speak later in Washington. Preliminary German inflation for April is expected on Friday. Dealers kept their bullish outlook on the dollar as higher-than-expected jobless claims released on Thursday did not alter views that the U.S. Federal Reserve was leaning toward raising interest rates from 46-year lows. "At this point, it's safe to say that healthy dollar buying is going to continue," said Hideaki Furumaya, forex manager at Trust and Custody Services Bank. "The dollar is at a stage where traders are going to look more at strong U.S. figures than weak ones," he said. Analysts were also chewing on recent remarks from China that it would buy more non-U.S. dollar assets in its foreign reserve investment.
"There's a batch of news coming out of China, and although it's not having a direct impact on the yen and the euro, it's giving the market something to think about in the longer term," said Takashi Toyahara, forex manager at Nomura Securities.///