The U.S. dollar climbed today after a Chinese Foreign Ministry official stated that the believes in the stability of the greenback, and informed that he is unaware of discussions next week during the G8 meeting regarding eventual substitutes for the dollar as the world main reserve currency.
The dollar hit yesterday a three-week low versus the euro after Reuters affirmed that China was discussing the possibility of bringing up the reserve currency topic in the following G8 meeting to take place next week in Italy. Today, the Chinese minister comments reverted the following trend reaffirming that China, at least for the moment, supports the dollar as the main global reserve currency, helping the greenback to stop the negative trend and gain versus the euro. This Thursday, a report may indicate another negative unemployment data in the U.S., which can push the greenback further down if confirmed.
The reserve currency issue is weighing negatively on the dollar, according to economists. Even if nothing will change at least in the short term future, rumors tend to amplify pessimism among traders, and consequences can be significant to the U.S. dollar as long as the reserve currency topic will be brought by news agencies and Government officials. Until next weeks G8 meeting, the dollar will be under pressure.
EUR/USD fell to 1.4093 as of 9:58 GMT after topping at 1.4200 yesterday. GBP/USD traded at 1.6350 from a previous rate of 1.6455.
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