Dollar Eases After G7 Maintains Status Quo

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The dollar weakened slightly on Monday after a meeting of finance ministers in Turkey failed to produce a statement in support of a strong US currency.

While Japanese finance minister Hirohisa Fujii said at the G7 meeting in Istanbul that officials in Tokyo are prepared to take "appropriate steps" if necessary to prevent the yen from rising much further, nothing was said to cement the dollar's status as the world's de facto reserve currency.

Traders shrugged off data showing that activity in the service sector expanded for the first time in a year in the month of September. The news came on the heels of Friday's troubling monthly jobs report and a pair of discouraging readings on the manufacturing sector.

There is little first-tier economic data on tap for later in the week, as corporate results move front-and-center after Alcoa kicks off earnings season Wednesday afternoon.

The dollar eased a bit versus the euro, sliding to to 1.4650. With US unemployment at a 26-year high of 9.8 percent and the consumer remaining anxious, the Federal Reserve is unlikely to unwind accommodative monetary policy anytime soon, hurting the dollar against higher yielding currencies like the euro.

Monday, the Eurostat reported that Eurozone retail sales declined 0.2% month-on-month in August, matching the pace registered in July. Economists were looking for a larger fall of 0.4%

The Bank of England and European Central Bank will make interest rate decisions later in the week.

The dollar saw very little movement versus the sterling, staying near 1.5950. In September, the buck hit a 4-month high near 1.5800, but has since leveled off on concerns about government spending.

Choppy trading left the dollar just below the 90 yen mark. A few weeks ago, the dollar tested a 13-year low of 87.08, reaching an 8-month trough of 88.21.

Sunday, Japan's Finance Minister Hirohisa Fujii said it would be premature to withdraw emergency measures now because there are uncertainty regarding the economic recovery.

Addressing the International Monetary Fund's policy steering committee meeting in Istanbul, he said, "While it is necessary to discuss exit strategies, at this moment, their implementation is still premature."

(Market News Provided by RTTNews)