The dollar was little changed against the euro on Friday, holding its ground during a choppy session, despite weaker-than-expected US fourth-quarter GDP data.
However, the dollar made gains versus the yen, which had spiked late Thursday after a Chinese academic advisor to the People's Bank of China suggested that the yuan should be revalued. The Chinese central bank later distanced itself from the statement, which caused the yen to fall broadly.
Traders said volumes continued to be thin on Friday with many of the larger banks and hedge funds holding back from betting on the dollar until a series of risk-laden major events are out of the way.
Those events include this weekend's World Economic Forum in Davos; today's Iraqi elections; next week's Federal Open Market Committee meeting, US President George W. Bush's State of the Union address and the release of the latest non-farm payrolls data.
The event with perhaps the greatest risk comes at the end of next week with the Feb. 4-5 Group of Seven industrialized nations meeting in London.
In late New York trading, the euro was at US$1.3042, from US$1.3039 late Thursday. The dollar was at ?103.37, from ?102.40 and at 1.1858 Swiss francs from SF1.1849. The pound was at US$1.8875 from US$1.8874. The euro was at ?134.81, from ?134.36.
After staying flat overnight versus the euro, the US dollar fell in the early New York session after the GDP data.
GDP increased at a 3.1 percent annual rate October through December, lagging the third quarter's 4.0 percent growth and the second quarter's 3.3 percent climb, the US Commerce Department said. It was the lowest rate of growth since the economy rose 1.9 percent in the first quarter of 2003.
However, when the dollar's fall against the euro hit the US$1.3080 level, traders said there was plenty of dollar-buying interest. Soon after, the dollar started to rise, quickly reaching a session high at US$1.2987.
The dollar drifted lower during the rest of the session despite a sharp drop in oil prices, which took crude prices away from the US$50 per barrel mark.
A central focus in the leadup to the G7 meeting will be whether China will make any change to its effective currency peg with the dollar -- or at least signal that it is moving toward some future change.
On Friday, it was announced that the governor of China's central bank will speak at a conference on the world economy on Feb. 4, hours before the G7 meeting gets going.
Meanwhile, the Canadian dollar ended lower in choppy trading on Friday, weakening in the face of renewed gains for the US dollar globally,
The US dollar was trading at C$1.2404, from C$1.2341 late Thursday.
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