Dollar higher after Bush comments

LONDON  - The dollar rose against major currencies Monday after US President Bush, speaking over the week end ahead of a Group of Eight summit in Japan, said his administration backed a "strong" dollar. The European single currency fell to 1.5648 dollars in early London trade from 1.5700 dollars late on Friday. Against the yen, the dollar gained to 107.54 yen from 106.73. The Group of Eight (G8) rich nations opened a summit Monday aimed at battling skyrocketing oil and food prices, as pressure mounted on them to live up to their pledges to help Africa. US President George W. Bush and other world leaders gathered in the secluded Japanese spa resort of Toyako for a three-day session, with seven African leaders joining them on the first day to take up the plight of the continent. "Invariably, with such a quiet start to the week (in terms of economic data), the G8 leaders summit will be watched," said Calyon economist Daragh Maher. "Inflation is likely to be the dominant economic theme, but it is hard to see what kind of concrete solutions can be provided given the still elevated level of energy prices. "There will of course be opportunity for the US administration to reassert its support for a strong dollar, as President Bush has done over the weekend," added Maher. 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." "We believe nothing surprising will come out from the summit. "We know it would be historical, but it is unlikely that the leaders would say (in a summit statement) they are united to prevent a weak dollar. Nonetheless we have to be careful," Takashima 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, he added. In morning London trading on Monday, the euro changed hands at 1.5648 dollars against 1.5700 late on Friday, at 168.28 yen (167.62), 0.7938 pounds (0.7924) and 1.6137 Swiss francs (1.6083). The dollar stood at 107.54 yen (106.73) and 1.0310 Swiss francs (1.0239). The pound was at 1.9715 dollars (1.9827). On the London Bullion Market, the price of gold dropped to 922.23 dollars per ounce from 931.25 dollars late on Friday.

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