Dollar weakens as EU meeting nears

AP News
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Posted: Jul 20, 2011 3:57 PM
Dollar weakens as EU meeting nears

The dollar fell against the euro and most other major currencies late Wednesday ahead of a meeting of European Union leaders.

Investors expect that the meeting, taking place Thursday, will produce some sort of agreement to help stem the region's debt crisis. Talks will focus on a new aid package for Greece and ways to stop the crisis from spreading to larger countries such as Spain and Italy.

EU leaders have been sending investors mixed messages about the possible outcome of the meeting. France has said that a big announcement is needed Thursday to boost market confidence. Meanwhile, Germany has downplayed the idea that just one meeting will lead to a quick solution.

"If EU officials are trying to manage the expectations of the market, they are not doing a very good job of it because based upon most of the comments we have heard today, a big announcement is expected for Thursday," said GTF currency analyst Kathy Lien in a note to clients.

If the meeting ends without a clear solution, that could hurt the euro, Lien said.

The euro rose to $1.4229 late Wednesday from $1.4134 late Tuesday.

Meanwhile, data released Wednesday showed that the U.S. housing industry is still far from recovering. The National Association of Realtors said U.S. home sales fell 0.8 percent in June. This year is on pace to being one of the worst for home sales since the housing bust began, according to the report.

Besides the euro, the dollar was falling against most other currencies. The British pound rose to $1.6162 from $1.6120. The dollar fell to 78.80 Japanese yen from 79.24 Japanese yen, fell to 0.8191 Swiss franc from 0.8240 Swiss franc and fell to 94.74 Canadian dollars from 95.08 Canadian dollars.

The dollar was also weaker against currencies in Norway, South Korea, Hong Kong and Latin America.