FINANCIAL MARKETS : Currency : Trade Report, Interest Rate News Send Dollar Down

The dollar turned mostly lower in foreign exchange Thursday, as the gloomy August trade report continued to dampen sentiment toward the U.S. currency.

Gold prices were higher. Republic National Bank of New York said gold was bid at $463.50 an ounce as of 4 p.m. EDT, up $2.25 from late Wednesday.

The dollar started out on a down note Thursday following the release of a government report Wednesday showing a trade gap of $15.7 billion for August, narrower than July’s record shortfall of $16.5 billion but higher than market expectations.

Currency traders worry that the weaker than expected report may pressure the dollar downward in order to make imports more expensive here and U.S. goods more affordable abroad.

At one point Thursday, traders said, the dollar rose slightly on rumors that the Federal Reserve may soon raise its discount rate, or the interest charged to member banks, but fell back when the White House called for lower interest rates.

Also hurting the dollar Thursday was a remark from Treasury Secretary James A. Baker III that he was displeased with West Germany’s efforts to drive up interest rates, traders said.

“That has the foreign exchange people wondering if there’s cooperation in the G-7,” said James T. McGroarty, a trader at Discount Corp.

The G-7, or Group of Seven, includes the United States and its six biggest trading partners.

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