Friday 19th Nov: Dollar shorts unwound ahead of G-20

Traders were unwilling to take too many risks ahead of the G-20 meet in Berlin and the European Banking Congress in Frankfurt on Saturday where Fed Chairman Greenspan and ECB Prez Trichet would address on “Euro in wider circles”.
This would be to acknowledge Euro’s pre-eminence in the Euro bond market.
The unwinding of dollar shorts gave greenback some respite amidst a clutch of disappointing data from US. Euro hit a record high of $1.3075, notching up gains of nearly 7% from its low of $1.22 levels in October. Weekly U.S. jobless claims fell, but the US leading indicators fell for a fifth straight month by 0.3% (forecast 0.1%). The Philly Manufacturing index fell to 20.7 in November (previous 28.5) with only the employment component showing a rise.
But with markets focusing on global forex policy, dollar showed little reaction to economic data. Despite dollar's rebound, it will remain under pressure because of the burgeoning current account deficit.
The only silver lining (if any) could be the elections in Iraq going smooth in January'05 which may be positive for dollar in the medium term.