The dollar climbed to a one-week high versus the euro after the Bundesbank said German industrial production unexpectedly fell in May and President George W. Bush reiterated support for a ``a strong'' U.S. currency. The yen weakened as stocks advanced, reviving demand for the so-called carry trade. The pound dropped after a report showed U.K. manufacturing contracted more than forecast in May.
The dollar rose to $1.5624 per euro, the highest level since June 25, before trading at $1.5661 as of 7:09 a.m. in New York, compared with $1.5706 on July 4. It also strengthened to 107.55 yen, from 106.80. The yen fell to 168.40 against the euro, from 167.73.
The dollar also rose to the highest level in more than a week versus the yen on speculation U.S. officials will say the currency has fallen too far and try to stem gains in oil prices as the G8 summit gets under way. Leaders from Canada, France, Germany, Italy, Japan, Russia, the U.K. and the U.S. are meeting in Hokkaido, Japan for three days.
Bush said yesterday, on the first day of his five-day trip to Japan, the U.S. will continue to pursue a strong dollar. ``The U.S. believes in a strong dollar policy,'' Bush said at a news conference with Japanese Prime Minister Yasuo Fukuda in Tokyo yesterday. The U.S. economy remains fundamentally strong even as growth has slowed, he said.
The Dollar Index traded on ICE futures in New York, which tracks the currency against those of the U.S.'s six biggest trading partners, rose 0.4 percent to 73.006, the highest level since June 25.
The U.S. currency also strengthened as crude oil fell after Iran's foreign minister expressed confidence in talks with western governments on the country's nuclear program. Crude oil for August delivery traded at $142.39 a barrel on the New York Mercantile Exchange. Oil reached a record $145.85 on July 3.