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The US$ held steady against major currencies yesterday amid expectations officials of the Group of Seven industrial nations will reaffirm support for a strong US$ at a summit this week.
Leaders of the G-7, which includes Canada, the U.S., Japan, Germany, Britain, France and Italy, begin meeting tomorrow in Lyon, France. After the meeting, they're scheduled to issue a report on foreign exchange rates and financial-market stability.
"The general feeling is that the G-7 support a higher US$, particularly Germany and Japan," said Brian Dolan, currency strategist at Credit Suisse.
While few traders expect G-7 leaders to call for the US$ to climb further, most expect them to endorse its rise from post-Second World War lows against the German mark and Japanese yen reached during the past year, Dolan said.
The US$ was little changed at 1.5285 marks as North American trading ended yesterday, compared with 1.5292 marks at Monday's close. It was at yen 108.91, little changed from Monday's yen 108.92.
In other trading, the mark fell to a 22-month low against the Italian lira as expectations for an interest rate cut boosted Italian stocks and bonds. Rising demand for Italian assets helps the lira because foreign investors need lire to acquire Italian securities.
The British pound was little changed at US$1.5402 from US$1.5412 Monday. The US$ was down slightly at 1.2602 Swiss francs from 1.2610 francs and at 5.1790 French francs from 5.1845 francs.
The C$ rose again, but gave up some early-day gains as its recent rally stalled. It closed at US73.61 cents, up from US73.52 cents Monday.
"The market didn't establish anything new today, we just kind of rattled around as the [US$] consolidated," said one trader at a foreign firm in Toronto. He said the market feels like there is more strength in the C$ to come, "but we're going to have to take a pause first."
A trader at a Canadian bank said the decision by Imperial Oil Ltd. (IMO/TSE) to buy back up to $1.34 billion of its own stock helped depress the C$, considering Exxon Corp. (XOB/NYSE) of Houston would likely be the biggest tenderer of stock to the offer. Exxon owns almost 70% of Imperial, Canada's biggest oil company, and the question remains what the U.S.-based firm will do with its sizeable windfall of C$s.
This information is provided by the Financial Post.
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