Foreign Exchange for Friday, August 29, 1986 : Dollar Falls Sharply; Gold Is Mixed

The dollar fell sharply against most major foreign currencies Friday after the U.S. government reported that the nation’s foreign trade deficit surged to a record monthly high of $18 billion in July.

Trading was surprisingly active in advance of the long Labor Day weekend.

Gold prices were mixed. Bullion was quoted at $387.75 an ounce at 4 p.m. EDT at Republic National Bank in New York, up $1.25 from Thursday’s late bid.

In early trading before the Commerce Department issued its trade report, the U.S. currency strengthened despite uncertainty about how large the merchandise trade deficit would be. But the dollar was knocked back by the July figures.

“As soon as the trade number was announced, the dollar very quickly dropped,” said Tom Benfer, a trader with Bank of Montreal in New York.

“Certainly this trade number was very, very negative for the U.S. dollar. It certainly showed that it’s going to take a long time before we see a reversal in our trade picture with our trading partners,” Benfer said.