Economic Hopes Boost Dollar as Gold Drops
The dollar edged higher against most other major currencies in U.S. trading Monday after posting a strong advance in Europe.
Gold prices fell moderately worldwide. Republic National Bank in New York quoted gold as of 4 p.m. EDT at $314 an ounce, down 25 cents from Friday’s late bid.
Currency traders said the dollar’s upswing reflected speculation in the market that the American economy, while still sluggish, might be growing stronger than previously thought.
Dealers noted last Friday’s report from the Labor Department that the U.S. civilian jobless rate in May held steady at 7.3% for the fourth straight month as a rise in employment among service industries offset declines in manufacturing.
The report also triggered an increase in interest rates in the U.S. money markets, leading some traders to suggest that the recent decline in lending charges--and hence yields on dollar-denominated investments--might have bottomed out.
The upturn in interest rates carried over into Europe on Monday, where rates on dollars on deposit in Europe rose by up to one-quarter point from their levels late Friday.
Traders said the dollar’s advance was limited, however, because the foreign exchange markets are waiting to see additional reports on the state of the U.S. economy. Later this week, the government is scheduled to report on May’s retail sales and wholesale prices.
The dollar began its trading day in Tokyo by climbing to 250.15 Japanese yen from 248.60 late Friday. In London, the dollar also was quoted at 250.15 yen, and, in U.S. trading, the dollar rose to 250.00 yen from 249.675. Also in London, the British pound slipped to $1.2612 from $1.2680 late Friday. In U.S. dealings, sterling fell to $1.2615 from $1.2705.
Other dollar rates in Europe, compared to late Friday, were: 3.1000 West German marks, up from 3.0770; 2.6090 Swiss francs, up from 2.5900; 9.4650 French francs, up from 9.3800; 3.4950 Dutch guilders, up from 3.4675; 1,977.00 Italian lire, up from 1,958.50, and 1.3725 Canadian dollars, up from 1.3710.
Other dollar quotes in U.S. trading as of 4 p.m. EDT, compared to Friday, included: 3.0840 West German marks, up from 3.0820; 2.6070 Swiss francs, up from 2.5945; 9.4025 French francs, unchanged, and 1.37205 Canadian dollars, down from 1.37235.
In bullion trading, the price of gold fell in Hong Kong to $313.60 an ounce from $315.33 on Saturday. In London, gold fell to $312.50 from $313.80, and, in Zurich, gold dropped to $310.60 from $314.50.