Monday 22nd Nov: Dollar hold firm after weekend meetings

The dollar held steady against most major currencies in European morning trade on Monday as the market awaited signs of government intervention, either verbal or actual.
The weekend meeting of G20 finance ministers in Berlin and the APEC summit in Santiago failed to provide any fresh sense of direction for the market.
The G20 communique pledged the US to cut its yawning budget deficit, and Europe to introduce measures to support domestic demand, but made no mention of the sliding dollar.
The APEC meeting proved similarly inconclusive for the market, with Chinese officials insisting they were not pressured by the US to relax their peg against the dollar.
President Bush did reassert his support for a “strong dollar policy”, but such rhetoric is increasingly being viewed as hollow by traders.
“The political gatherings over the weekend did not result in any substantial policy shift that would lead foreign exchange market participants to question the continuation of the current trend of dollar selling,” said Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi.
“With little sign of any political attempt to arrest the decline in the dollar, market participants are likely to revert their focus to Friday’s comments from Fed chairman Alan Greenspan who stated that foreign investors would ‘at some point’ likely tire of increasing their holdings of US securities rendering the funding of the current account deficit problematic.”
The G20 communique did call for greater exchange rate flexibility from “emerging” Asian economies, but any fresh support for Asian currencies was lessened by Hiroshi Watanabe, the Japanese vice finance minister, who described the yen’s recent rise against the dollar as “too rapid” and said the yen had the potential to “become a big concern”.
Amid jitters that Japan may lead a renewed bout of intervention, the yen drifted a fraction to Y103.12 against the dollar and the South Korean won slipped a little to Won1,065.3 against the greenback.
The dollar was also little changed at $1.3032 to the euro, although it strengthened to $1.8538 against sterling. The pound was generally weak, slipping to a fresh 11-month low of £0.7029 against the euro and to Y191.15 against the yen.
The catalyst was the latest soft UK housing market report, with Rightmove reporting a 1.7 per cent slide in prices in November, just a day after reports that Barclays Bank sees house price falling 20 per cent over the next three years. Such talk lessens the likelihood of any further UK interest rate rises.
The Canadian dollar firmed to C$1.1910 against the greenback after David Dodge, the governor of the Bank of Canada, said the loonie appreciation against its southern counterpart was not inappropriate, and that he only favoured currency intervention in “exceptional circumstances”.