G20 meeting might provide clues on removing liquidity-boosting measures NEW YORK (MarketWatch) -- The dollar gained ground versus the Japanese yen and the euro in choppy trade Friday after the U.S. Labor Department said the unemployment rate jumped in August to its highest level since 1983. Currency traders also braced for the meeting of G20 ministers in London Friday night and Saturday, which might provide some clues on which countries might be closer to eventually start soaking up liquidity injected to boost their economies. "Comments ahead of the G20 show that exit strategies are on the agenda, but there also appears to be an increasing number of warnings from policy markers that these strategies should not be implemented too early," analysts at BNP Paribas said in a note. The dollar traded at 92.88 yen versus the Japanese currency, up from around 92.71 yen just ahead of the figures and 92.75 yen in North American activity late Friday. The dollar initially dipped below 92.20 yen versus the Japanese unit after data showed the U.S. unemployment rate jumped to 9.7% from 9.4% in July. Economists had forecast a rise to 9.5%. Nonfarm payrolls, meanwhile, contracted by 216,000, less than the 233,000 decline projected by economists. See full story. The euro initially dipped versus the dollar before regaining its footing to trade at $1.4261, up slightly from $1.4249 late Thursday. Brusca: Only two months away from job growth The dollar index (DXY 78.35, -0.11, -0.14%) , which measures the greenback against a basket of six currencies, stood at 78.485, up from 78.418 late Thursday. DXY 78.35, -0.11, -0.14% 90858075 FAJA A positive tone in global equity markets led to a modest increase in investors' appetite for risk, putting some pressure on the dollar and the Japanese yen. The currencies have tended to suffer when investors seek out riskier assets. U.S. stocks were mildly higher in recent action, with the S&P 500 index (SPX 1,013, +10.09, +1.01%) up 0.4%. Meanwhile, G20 ministers set to gather in London are expected to broadly discuss a framework for a coordinated withdrawal of massive stimulus measures once the economic crisis has passed. No immediate withdrawal of government support is foreseen, however, in light of the still-fragile nature of the recovery despite signs of an earlier-than-expected recovery in some areas. See full story. "Investors should pay attention to the London summit," wrote strategists at UniCredit MIB. While they don't anticipate big surprises, the strategists told clients that any "cautiously optimistic remarks" made by the G20 finance ministers "may still weigh on both the dollar and the yen."

Source