The euro moved lower vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.3875 level and was capped around the $1.4000 figure. Group of Eight officials are convening in Italy from Wednesday to discuss the global economy and representatives from major emerging market economies including Russia, China, India, and others will be present. There has been a significant amount of recent talk about the U.S. dollar being replaced as the main international reserve currency. Russian President Medvedev said the current U.S. dollar-based system is €œflawed€ but added €œthere is no alternative to the U.S. dollar or the European currency.€ Indian Economic Advisory Council chairman Tendulkar said he is urging his country to diversify its foreign exchange reserves and reduce its holdings of U.S. dollars. European Central Bank President Trichet added €œit€™s extremely important that the U.S. authorities€¦say that a strong dollar is in the inerest of the U.S.€ Trichet also warned consumer confidence is lagging and said weakness in the labour sector may not be fully priced in. Data released in the eurozone today saw the July Sentix investor confidence index decline to -31.3 from -27. Trichet spoke about the eurozone banking system today, saying commercial banks should €œrestructure as much as possible their situation when needed€ and said banks need to pass liquidity on to borrowers and not horde cash. ECB member Noyer verbally intervened in the FX market saying €œwe must ensure a bigger stability between currencies in the coming months€ and said €œwe must avoid€¦the piling up of currency reserves.€ ECB member Paramo reported current interest rate levels are appropriate and foresees EMU-16 economic growth by H1 2010. In U.S. news, the June ISM non-manufacturing composite index printed at a better-than-expected 47.0, up from 44.0 in May. Euro bids are cited around the US$ 1.3435 level.
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