RTTNews - The dollar was mixed against other majors on Wednesday, falling further to a nearly 5-month low versus the yen while firming up on the euro and sterling.
Risk averse traders preferred the dollar to its European counterparts as stocks continued to lag, but nagging rumors that G8 leaders will discuss an alternative to the buck as the world's de facto reserve currency gave hurt the greenback versus the yen.
Leaders from around the world gathered in L'Aquila, Italy on Wednesday, and even though the Chinese said they would not puruse talks on a new international currency, the dollar has been stuck in the mud of late due to concerns about the US government spending and some troubling recent economic data.
Still, Chicago Federal Reserve Bank President Charles Evans called on the Federal Reserve to lay the groundwork for a reduction of their bloated balance sheet, in light of economic conditions that continue to improve. Speaking in Indiana, Evans predicted modest growth for the economy by the end of the year.
The bottom fell out on the dollar against its Japanese counterpart. After inching lower over the past week, the dollar plunged to 91.79, its lowest level since February.
The dollar held up versus the euro, rising to 1.3833, its highest level since June 22. Still, its been a choppy two months versus the dollar against the single currency, with traders unsure about the direction of the euro area economy.
Economic activity in the euro area in the first three months of the year contracted by the most since records began in 1995 on plummeting investment and exports, a second estimate from Eurostat confirmed on Wednesday.
GDP for the 16-nation bloc shrunk 2.5% in the first quarter from the fourth quarter.
Versus the sterling, the dollar rose to a monthly high of 1.5982, having picked up almost 6 cents in July.
The International Monetary Fund said Wednesday that the global economy is expected to grow by 2.5 percent in 2010, 0.6 percentage points higher than the organization's earlier estimate of 1.9 percent growth.
India and China, whose economies are expected to expand 8.5 and 6.5 percent, respectively, will lead the growth, according to the IMF.
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