The dollar inched lower today and back toward record lows against the euro as traders braced for a meeting of G20 finance ministers that is not expected to act against the dollar's recent weakness.
Expectations that the Group of 20 - which includes most major developed and developing countries - will not move to slow the dollar's fall pushed the currency to an all-time low versus the euro and a seven- month low against the yen yesterday.
"The market isn't done with selling the dollar yet," said Jun Kitazawa, assistant vice president of the forex section at Brown Brothers Harriman in Tokyo. "The market's focused on the U.S. deficit and this is not going to end soon."
At 6.45 a.m., the euro fetched around $1.2975, up slightly from 1.2962 in late New York trade.
Yesterday the euro marked a record high of $1.3075 during London hours, which represented a gain of nearly 7 per cent from its low near $1.22 in October, before the dollar recovered on position squaring.
Many investors say that US purchasing power, namely the value of the dollar, needs to be reduced to curb the deficit. Washington is also seen by many in the market as happy to let that happen, though European and Japanese policy makers have voiced concerns about the recent fall in the dollar.
US Treasury Secretary John Snow said this week that currency intervention was "non-rewarding", fuelling speculation that the G20 meeting will not herald any coordinated forex policy.
Traders are now waiting for the G20 meeting to kick off in Berlin later in the day, on guard for any comments from policy makers, though many dealers don't expect anything new.