RTTNews - The dollar continued to show a lack of direction versus other major currencies Tuesday in New York as traders geared up for the meeting in Italy of leader from the eight largest industrialized nations.

While discussion of a new global reserve currency is apparently off the table, markets will be watching for statements on the world economy and tensions in the Middle East.

There were no first-tier economic data from the US to consider, and with many traders around the world away from their desks during these dog days of summer, there was little impetus to drive currencies.

The dollar firmed up versus the euro and sterling after coming under pressure in early dealing. Stocks dropped on Wall Street, fueling a bit of renewed interest in the lower-yielding dollar and yen.

Against the euro, the dollar stayed near 1.4000, having
touched a 2-week high of 1.3876 on Monday. Traders reacted to news that German factory orders grew more than expected in May.

The Federal Ministry of Economics and Technology said German factory orders recorded a monthly growth of 4.4% in May, much larger than the expected increase of 0.5% and April's 0.1% rise.

The dollar held its ground near 1.6150 against the sterling, hovering around yesterday's monthly high of 1.6095.

U.K. industrial production unexpectedly dropped 0.6% in May from April, a report from the Office for National Statistics showed Tuesday. At the same time, manufacturing output decreased 0.5% compared to previous month.

The buck failed to make up much ground versus the yen, staying near yesterday's 6-week low of 94.65. A report by Japan's Ministry of Finance said the official reserve assets totaled US$1.019 trillion at the end of June, representing a decline of US$4.84 billion from May.

Wednesday will be a busy day for currency traders. The Mortgage Bankers' Association's purchase applications index, which measures applications at mortgage lenders is due to be released at 7 AM ET.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended May 1st at 10:30 AM ET on the same day.

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