NEW YORK, May 17: The dollar extended losses in late New York trading on Friday, weakened by speculation that the Group of Seven finance ministers will withhold comment on foreign exchange, giving traders a new excuse to dump dollars.

Earlier a G7 source said finance ministers from the world’s leading economic nations saw no problem with the current euro/dollar rate. The G7 finance ministers meet in France this weekend.

If G7 officials stay mum on recent developments in the foreign exchange market ... that’ll give traders the green light to keep selling the US currency, said Alex Beuzelin, foreign exchange market analyst at Ruesch International.

I think the market suspects there won’t be any significant comment from the G7, he said. They’re not overly alarmed by developments that have taken place.

The dollar fell early on Friday on market concerns about slowing US economic growth, but took mild support from speculation that Japan may be selling its currency.

Last week, the Federal Reserve’s warning that the economy was susceptible to the risk of falling prices heightened the market’s focus on price data. That factor was apparent in early US trading, when the Labour Department reported that consumer prices in April fell by a sharper than expected 0.3 per cent.

The stop-go nature of the US recovery has also concerned many economists and soured sentiment on the dollar. News that US housing starts fell 6.8 percent in April also weighed on the US currency.

The US economy is still in better shape relative to the euro zone. Recent data out of the US has not been as dismal, said Lara Rhame, senior economist at Brown Brothers Harriman in New York.

But even as several of Europe’s largest economies teeter on the brink of recession ... this disinflation factor is adding a whole new level of uncertainty to the US economic outlook, and that is weighing on the dollar, Rhame said.

Europe’s common currency traded around $1.1571 against the dollar, up 1.67 per cent from its prior US close but below Monday’s four-year high of $1.1623.

Earlier this week, definitely there was a sense that the euro’s rally was running out of steam, but the way it’s traded today suggests there is strong demand, said Daniel Katzive, foreign exchange strategist at UBS Warburg.

The dollar fell by more than 1 per cent against the Swiss franc, trading at 1.3071, near a four-year low at 1.3003 francs.

The University of Michigan’s preliminary consumer sentiment reading for May showed a large jump to 93.2 from 86.0 in April, well above market expectations and outpacing April’s final reading of 86.0. However, traders remained fixated on the poor figures which preceded the confidence data.

The Fed has drawn a distinction between what consumers feel and what they spend. Markets, by blowing past the confidence figure, appeared to be coming to the same conclusion, analysts said.—Reuters