The dollar gained marginally on Monday in range-bound trading as investors concluded that a Group of Seven statement warning against "excess volatility" in currency markets suggested no official action to stem the greenback's downtrend.
The US currency reacted little to a statement from US Treasury Secretary John Snow reiterating the Bush administration's stance that global exchange rates should be set in competitive markets.
"The market is taking the view that changes to the G7 statement were pretty minor," said Lara Rhame, senior economist at Brown Brothers Harriman. "(US Fed Chairman Alan) Greenspan is the next big focus and we are likely to be in a post-G7 range until then," she added.
Greenspan will testify on the economy before a House of Representatives panel on Wednesday. He is also scheduled to appear before the Senate Banking Committee on Thursday.
In late afternoon US trade, the euro was down 0.17 percent at $1.2683. The dollar was up 0.20 percent at 105.62 yen. Sterling rose 0.6 percent to $1.8574. The Australian dollar was up 0.7 percent at US $0.7755.
The euro earlier raced to as high as $1.2761 after it became apparent after the weekend G7 meeting that the group's statement did not signal any co-ordinated dollar-buying intervention. Sterling offered the biggest drama, scoring an 11-year high of $1.8628.
But overall, markets have largely disregarded the G7 communiqué, which said: "Excess volatility and disorderly movements in exchange rates are undesirable for economic growth."
"I don't think people are interpreting that as raising the risk of co-ordinated central bank intervention to halt the dollar's slide," said Alex Beuzelin, foreign exchange analyst at Ruesch International in Washington D.C.
"While the G7 statement could prompt a pause in the dollar's downward trend, it's not going to halt it," he said.
Snow, speaking to reporters after addressing a group of Cuban-Americans in Miami, also said that while currency interventions should be kept to a minimum, it is still an option open to US monetary authorities.
Analysts, however, did not take Snow's remarks to heart.
"Snow really had no impact. He made a comment about intervention and that it should never be ruled out. But people are sophisticated enough to know. Why would he ever rule out intervention?" said Kenneth Landon, currency strategist at Deutsche Bank in New York.
Earlier, the dollar got a mild boost from a published report saying that European Union finance ministers will discuss "all possible ways" to curb euro gains, raising the prospect of possible dollar buying.
Traders said the Dow Jones report, which quoted an unidentified European Union official, triggered a mild sell-off in the euro. The finance ministers met on Monday in Brussels.
But Dutch Finance Minister Gerrit Zalm, dousing hopes of possible joint currency action to stem the euro's gains, told Reuters after the meeting in Brussels that euro zone finance ministers were in general satisfied with the G7 statement as well as the single currency's present value against the dollar.
Belgian Finance Minister Didier Reynders also said the ministers had not discussed intervention in currency markets.
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