By Forex District – The Dollar advanced across the board as investors locked in profits ahead of this weekend’s G8 Finance Minister’s meeting. There could be a great deal of information and statements released over the weekend that could potentially impact the short term moves in the Forex market.

However, there is not much expected to come out of the G8 meeting in regards to Foreign Exchange, yet investors need to be attentive to any statements focusing the Dollar. As usual, the G8 will probably reaffirm its stance in a strong and stable financial system and release a statement as follows “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We continue to monitor exchange markets closely, and cooperate as appropriate.”

Any noted concern over the weakness of the Dollar could potentially impact the currency in the near term. However, it could be met by an expected wave of  selling pressure by middle of next week. The G8 is anticipated to focus on the recovery process and ways on how nations should withdraw financial stimulus.

Comments from Japan’s Finance Minister Yosano also helped the Dollar strengthen, ahead of the G8 meeting, as he reaffirmed his full support to the United States. Yosano expressed his nation’s confidence in U.S. debt as “unshakable” and said the USD’s global reserve status is secure.

The Dollar rose against the Euro dropping below the 1.40 level from 1.4170 high (yesterday). GBP/USD fell to as low as 1.6329 from the 1.66, while the AUD/USD fell to as low as 0.8057 from a 0.8220 high. The pairs, however, were able to hold onto key support levels with the EUR/USD unable to drop below 1.3950, the AUD/USD below 0.80 and the GBP/USD below the 1.6200. Nevertheless, a near term caution was recommended as the G8 could provoke the currency market to gap into Sunday’s open and the pairs to fall below the aforementioned levels.

The University of Michigan consumer confidence came in slightly weaker than expected at 69.0 from 69.5 forecast. Though, the data showed the fourth consecutive monthly increase since the February 2009 low of 56.3. This marks the highest reading in nine months as consumer’s became more optimistic about the economic and their financial outlook.

The U.S. price index for imports on goods and services for the month of May increased by 1.3%, following a revised 1.1% in April, the Department of Labor reported today. On a year per year basis, overall imports have declined by 17.6%, however, April’s reading posts the third consecutive jump and the largest since July of last year.

Euro fell below 0.85

As the Euro fell against the Dollar, it also weakened against the Pound as EU economic data signals continued weakness in fundamentals. Industrial production declined by 1.9% in April compared with March 2009, according to a report by the Eurostat. Data reports the eighth consecutive monthly decline and follows an upwardly revised March reading of -1.4% from -2.0%.

Data was much weaker than anticipated as economists expected the rate of contraction to moderate to -0.4%. On an annual basis, April industrial production fell by 21.6% compared with same period last year.

Looking ahead…

U.S. Treasury Secretary Timothy Geithner will host a press conference following the G8 Meeting of Finance Ministers Saturday June 13, 2009. Investors need to be attentive to his statement, as these combined with the G8 statement could guide price action at the start of next week.

Originally Posted at ForexDistrict