Dollar steady as G7 skips over currencies

SYDNEY (Reuters) - The U.S. dollar held mostly steady early on Monday after a weekend meeting of industrialized nations passed with little comment on currencies, though the euro found some support as the ECB challenged talk of early rate cuts.

The euro edged up to $1.4520, from $1.4507 late in New York on Friday, with trade very thin as Tokyo was off on Monday while China was still celebrating Lunar New Year.

The Group of Seven (G7) finance ministers cautioned that the global credit crunch would drag on the world economy but left it to individual countries to take their own remedial action.

The single currency was aided by European Central Bank President Jean-Claude Trichet who warned the market not to bet on a cut in interest rates because of persistent inflation pressures in the euro zone.

"At the very least this suggests that the ECB is keen not to be railroaded into an early easing of policy," said Darren Gibbs, a senior economist at Deutsche Bank.

Euro zone finance ministers also sounded relatively relaxed about the euro's strength against the U.S. dollar.

Investors, however, still seem to be betting that Europe has not de-coupled completely from the United States and will be impacted badly enough to force a policy easing in coming months.

Such speculation dragged the euro down around three U.S. cents last week, taking it as low as $1.4440 at one point.

Indeed, Deutsche's Gibbs said his bank had last week penciled in more easing from the ECB and now saw euro zone rates falling a full percentage point to 3 percent by year-end with the easing beginning some time in the second quarter.