LONDON (AFP) – The dollar fell on Monday as China accused the United States of increasing protectionism and following unexpectedly strong Japanese economic growth figures, pushing gold prices to a record high point.
US President Barack Obama is in China for a three-day mission aimed at convincing Beijing that Washington is its partner, not its rival.
As the dollar dropped against the euro and yen, gold struck an all-time peak of 1,133.20 dollars an ounce.
In late morning trading here, the euro climbed to 1.4969 dollars from 1.4918 dollars late in New York on Friday.
Against the Japanese currency, the dollar fell to 89.42 yen from 89.66 yen late on Friday.
"Far better than expected Japanese third-quarter GDP data...spurred risk appetite," said Jane Foley, an analyst for online trading firm Forex.com.
"This pushed the euro close to 1.50 dollars in early European hours."
Japan's gross domestic product (GDP) grew 1.2 percent in the third quarter of 2009 from the previous quarter -- the fastest pace in two-and-a-half years and much better than expected, the government reported.
The euro also gained as higher commodity prices, driven by hopes of a global economic recovery, spurred investor risk appetite, market watchers said.
"Gains in gold prices lifted demand for currencies of commodities-exporting nations like the Aussie against the US dollar," Osao Iizuka, chief foreign exchange trader at the Sumitomo Trust and Banking Co, told Dow Jones Newswires.
"Then the selling of the US dollar spread across other currencies, causing the euro to gain ground," he said.
Comments from a Chinese commerce ministry spokesman accusing the US of protectionism earned a quick rebuttal from senior US officials speaking in Beijing, who said a trade war was in neither country's best interests.
"We used to see that the United States was an innovation-driven US. But what we are seeing now is an increasingly protective US," commerce ministry spokesman Yao Jian told reporters at a regular monthly briefing.
"It is necessary to create for enterprises a stable and predictable environment, including (stable) economic and foreign exchange policies, to help the global economy grow steadily and China's exports recover," he said.
Yao added that the United States had "continued" to let the dollar drop "to improve its competitiveness" while pressing for the yuan's appreciation.
"It is detrimental to the global recovery and is unfair for (the US) to require other (currencies) to rise while allowing the dollar to keep slumping," Yao told reporters.
But US Commerce Secretary Gary Locke said Washington was not at fault.
"The United States is not engaged in increased protectionism," Locke told a luncheon in Beijing.
Obama is expected to raise trade tensions with his counterpart Hu Jintao and also urge China to reconsider the value of the yuan, which has been effectively pegged to the dollar since July 2008 and is deemed by Washington as being kept artificially low to boost Chinese exports.
In London on Monday, the euro was changing hands at 1.4969 dollars against 1.4918 dollars late on Friday, at 133.85 yen (133.57), 0.8966 pounds (0.8937) and 1.5096 Swiss francs (1.5093).
The dollar stood at 89.42 yen (89.66) and 1.0085 Swiss francs (1.0117).
The pound was at 1.6695 dollars (1.6693).
On the London Bullion Market, the price of gold jumped to 1,131.70 dollars an ounce from 1,104 dollars an ounce late on Friday.
info came from http://news.yahoo.com/s/afp/20091116/bs_afp/forexeurope_20091116120712
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