Dollar mixed in Asia with eyes on G8

Wednesday July 08, 2009

TOKYO: The dollar was mixed in Asian trade Wednesday as fresh uncertainty over prospects for a US economic recovery and the outcome of a Group of Eight summit hung over the market. The dollar dropped to 94.56 yen in Tokyo morning trade from 94.81 in New York late Tuesday. The euro fell to 1.3885 dollars from 1.3926 and to 131.24 yen from 132.06. Traders were cautious ahead of the G8 summit that was due to start later Wednesday in Italy amid fresh jitters about the economic outlook. Japanese core machinery orders, a closely watched barometer of business investment, fell to their lowest level on record in May, data showed. Doubts over a US recovery resurfaced after a top White House economic advisor suggested that Washington may need a second stimulus package, NAB Capital strategist Spiros Papadopoulos wrote in a note. "The question is whether the US economy has reached a level of stabilisation yet, but the recent unemployment numbers tell me it hasn't," Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said in Singapore. US unemployment surged to a new 26-year high of 9.5 percent in June, government data showed last week. Traders were turning their attention to the G8 summit in Italy where leaders were expected to discuss efforts to tackle the global economic crisis. China had said last week that it wanted a broader global monetary system, sparking speculation that G8 leaders might discuss the dollar's status as an international reserve currency, potentially weighing on the greenback. "China fears its massive holdings of US debt ... are increasingly at risk alongside a falling dollar," said Papadopoulos. "But a quick glance at the agenda makes it pretty clear there will be little time for serious debate on the creation of a new global reserve currency," he added. Chinese President Hu Jintao cut short his trip to Italy to return to China because of unrest in the northwest Xinjiang region, leaving State Councillor Dai Bingguo to take part in the summit on his behalf. (AFP)