NEW YORK (AFP) — The dollar traded mixed Monday as markets eyed the possibility of a G8 statement to support the US currency, while weak economic data from Germany and Britain temporarily depressed the euro.
The greenback was briefly bolstered by US President George W. Bush who spoke over the weekend in favor of a "strong" dollar ahead of the Group of Eight summit in Japan.
But the dollar's rally appeared to fade and the European single currency fetched 1.5730 dollars at 2100 GMT from 1.5694 dollars on Thursday in New York ahead of the US Independence Day holiday.
Against the yen, the dollar gained to 107.10 yen from 105.84.
Bush on Sunday reaffirmed that the United States "believes in a strong dollar," saying the US economy's fundamental strength would ultimately support the flagging currency.
Osamu Takashima, chief currency analyst at Bank of Tokyo-Mitsubishi UFJ, said even though Bush was only reflecting the official US position, "it bears importance that he repeated the policy on a summit occasion."
Kathy Lien at Forex Capital Management said traders are not expecting a shift to support the greenback but are watching for any new language.
"There hasn't been any speculation about a change in the foreign exchange language, but if one was to happen, the only possibility would be dollar bullish comments," she said.
There is also caution in the market as senior monetary officials are to speak later this week, including congressional testimony by Federal Reserve chairman Ben Bernanke on Thursday.
Meanwhile German industrial production marked its biggest drop in almost 11 years in May, official data showed Monday, leading analysts to suggest Europe's biggest economy might have contracted in the second quarter of 2008.
Industrial production dropped by 2.4 percent from April, with the economy ministry saying its provisional, seasonally-adjusted figure was partly the result of two long weekends.
Britain's manufacturing output also shrank in May, according to official data published on Monday.
The Office for National Statistics (ONS) said that manufactured production declined by 0.5 percent in May from April and dipped by 0.8 percent on a 12-month basis.
In late New York trade, the dollar stood at 1.0261 Swiss francs from 1.0264 Thursday.
The pound was at 1.9765 dollars after 1.9824.
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