The dollar slipped further in foreign exchange trading Wednesday as worries persisted about the U.S. trade gap with Japan.
Gold prices drifted lower in domestic trading after a mixed performance overseas. At Republic National Bank of New York, gold was bid at $476.25 an ounce at 4 p.m. EST, down from $477.50 late Tuesday.
Tuesday's report from Japan, which showed a growing surplus in trade with the United States, continued to put pressure on the dollar.
In light of that report, traders appeared eager to dismiss the more positive trade figures released last Friday in Washington, showing a decline in the U.S. trade deficit to $13.2 billion in November.
Indeed, a rumor that the U.S. government report had significantly underestimated the November deficit caused a heavy dollar selloff in early European trading. Although the rumor was later determined to be unfounded, the dollar's weakness carried over to domestic trading.
"We'll continue to sell dollars and buy the currencies until we see more intervention (from the central banks) or better economic numbers," said Joseph Calley, a currency trader for Prudential-Bache Securities Inc.
"Guys who were quite euphoric are now emphatically talking the dollar lower," said Douglas Madison of BankAmerica. "It's not often that traders flip-flop their attitudes so quickly."
Dealers said the revision rumors dampened the bullish sentiment that accompanied last week's U.S. trade figures.
"That got people thinking that one month doesn't make a trend," said Earl Johnson of Harris Trust & Savings Bank. "We could slip a little bit more for the rest of the week."
Little other news emerged to influence the market, with dealers predicting that the dollar would move within a trading range over the near term--possibly even up until the next U.S. trade report due out in mid-February.
In Tokyo, the dollar fell sharply against the Japanese yen this morning. The dollar opened at 127.15 yen, down 1.63 yen from Wednesday's close of 128.78 yen. It was trading at 127.40 yen at midmorning.
The dollar also fell against the British pound Wednesday, which was quoted in London at $1.7925, more expensive than Tuesday's $1.7750. In New York, the pound fetched $1.79765, compared to $1.77465.
Other late dollar rates in New York, compared to late Tuesday, were: 1.6585 West German marks, down from 1.6800; 1.3462 Swiss francs, down from 1.3670; 1.28355 Canadian dollars, down from 1.28565; 5.5975 French francs, down from 5.6590, and 1,218.25 Italian lire, down from 1,232.50.
Dollar rates in Europe, compared to late Tuesday, were: 1.6615 West German marks, down from 1.6815; 1.3490 Swiss francs, down from 1.3695; 5.6110 French francs, down from 5.6685; 1.8690 Dutch guilders, down from 1.8895; 1,222.50 Italian lire, down from 1,234.50, and 1.2822 Canadian dollars, down from 1.2870.
Gold was quoted in London at a bid of $477.75, up 75 cents from late Tuesday. In Zurich, gold was unchanged at a bid of $477.
Earlier, the metal closed in Hong Kong at a bid of $479.33, up from $479.07.
At the New York Commodity Exchange, gold bullion for current delivery was quoted at $476.50, down from $477.50 late Tuesday.
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