NEW YORK, Aug 24: Investors sold the dollar on Friday, taking advantage of Thursday’s powerful greenback rally to protect some profits ahead of the weekend.

Traders said weak US stocks contributed to the dollar’s third of a per cent decline against the euro and Swiss franc and marginal drop against the yen after having rallied more than 1 per cent against all three on Thursday.

After a rather paltry week in terms of economic data, investors will have more to chew over starting Monday, with a slew of reports from Group of Seven countries.

I don’t think there are any numbers coming out that will show any great strengthening of the US economy, said John Hazelton, director of foreign exchange at PNC Bank in Pittsburgh.

Still in the midst of this rally for the dollar, I think it trades in the technical frame of reference, which means staying within the current trading range, he added.

Key reports for the United States are the July durable goods order, which is expected to rise after falling in June. August US consumer confidence is seen nudging higher. The Chicago PMI report, a measure of mid-west manufacturing is expected to show an increase for August.

The most influential report out of Europe, the Ifo index, a measure of German business sentiment is expected to show a slight decline, while Japanese second quarter gross domestic product is expected to rise slightly.

The euro traded near its session high of 97.31 cents, a gain of roughly 0.40 per cent compared with Thursday’s New York close. But earlier in the session, the euro did make a fresh two week low of 96.66 cents.

The dollar was down near its session low against the Swiss franc at 1.5119 francs, a loss of roughly 0.50 per cent on the day. Before losing ground, the dollar touched a fresh two month high of 1.5240 francs.

The dollar also shed 0.23 per cent against the yen, trading at 119.59 yen on the day, down from the two week high of 120.28 yen.

People overextended themselves a bit earlier this week and now they are suffering, said a Swiss bank trader. With all the activity in the past 24 to 48 hours, a lot of positions had been cleaned out and now we seem to be trading in a vacuum.

For the week, the dollar is up more than 1 per cent against the euro and up 1.6 per cent against the Swiss franc and yen.

After hitting seven week highs on Thursday, US stocks stocks trimmed the gains. The Dow Jones industrial average fell 2 per cent. The Nasdaq Composite index lost 2.97 per cent and the S&P 500 lost 2.27 per cent.

US Treasuries, however, were stronger on the back of stock market losses, which could be helping to stem the dollar’s losses. Additionally, a surge in demand for US corporate debt $14 billion issued this week was snapped up by investors seeking alternatives to low-yielding Treasuries, is also a positive for the dollar, analysts said.

The worst fears about US asset markets are dissipating, so the risks of significant outflows have diminished, said Robert Sinche, head of Global Currency strategy at Citibank in New York, adding: The question is whether inflows will accelerate sufficiently to finance the significant US current account gap.

The dollar has lost roughly nine percent against the euro, yen and Swiss franc this year, partly due to worries about the gaping US current account deficit.

The week’s corporate supply is the most the market has seen in at least three months.—Reuters