Monday June 29, 10:23 PM
Dollar mixed as China comments limit selling
NEW YORK (AFP) - The dollar held in a narrow range Monday after comments from China's central bank governor eased concern about an abrupt shift away from greenback holdings by Beijing.
The euro nonetheless edged up to 1.4088 dollars at 2100 GMT from 1.4064 dollars in New York late on Friday.
Against the Japanese currency -- sometimes seen as a proxy for China's yuan -- the greenback rose to 96.04 yen from 95.22 yen on Friday.
Some of the heavy dollar selling from last week abated Monday after People's Bank of China governor Zhou Xiaochuan was quoted as saying that Beijing's reserve policy "is always quite stable" with no sudden changes, said Sacha Tihanyi at Scotia Capital.
"These comments seek to quell the shorter term negative impact from the (central bank's) 2009 financial stability report (last week) that one again raised calls for a new global reserve currency," Tihanyi said.
"From these two differing and seemingly contradictory approaches, it seems safe to say that the Chinese are pursuing a rather logical path. They will continue to accumulate dollar reserves, as doing so fits their three-adjective criteria, while also pushing for international acceptance of an alternative to the dollar in a new global currency."
The analyst said the Chinese official reiterated a policy based on three criteria -- "liquidity, safety and returns."
The euro failed to win much support on currency markets from a rise in the European Commission's economic sentiment indicator for the 16-nation eurozone for a third month in a row, dealers said.
Investors were waiting for key economic data due this week, with the focus on a US jobs report on Friday which will give a clearer picture of recovery prospects for the world's largest economy.
"The news and data over the coming week is expected to be asset market friendly, supporting risk appetite, suggesting that the US dollar will remain under broad based pressure," analysts from French bank BNP Paribas (Paris: FR0000131104 - news) said.
Derek Halpenny of Bank of Tokyo-Mitsubishi (MBC.IL - news) said it would be "a heavy week of economic data culminating with the US employment report and the ECB monetary policy meeting on Thursday."
The US data "should confirm a further gradual improvement," he added.
Although the pace of job losses in the United States appears to have slowed recently, the unemployment rate hit a 26-year high of 9.4 percent in May.
The European Central Bank was meanwhile expected to keep its lending rate unchanged at a record low of one percent when it meets.
Market players were meanwhile also looking ahead to a closely watched survey of Japanese business confidence due out on Wednesday.
The Bank of Japan's quarterly "Tankan" survey is expected to show an improvement in sentiment among Japan's major manufacturers from a record low the previous quarter, helping to underpin improving investor confidence.
In late New York trade, the dollar stood at 1.0823 Swiss francs from 1.0825 Friday.
The pound was at 1.6568 dollars from 1.6521.
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