CURRENCY : Dollar Gets a Boost From Report on Unemployment

The dollar rebounded sharply against most key currencies in active domestic trading Friday after the government released its January unemployment report.

Gold prices slumped as a result of the dollar’s strength. Republic National Bank of New York quoted a late bid for gold of $440.50 an ounce, down $4.50 from Thursday.

Traders said there was a rush to buy dollars following the jobless report, although some said the U.S. currency had been poised to rise regardless.

“There’s a firming trend toward the dollar,” said Dan Holland, a trader at Discount Corp. in New York. “I wouldn’t call it bullish yet, but there have been some efforts to reach some psychologically important (currency) levels.”

The Labor Department said the unemployment rate held steady at a decade-low 5.8% last month but that payroll growth was at its slowest pace in 19 months.

Foresees Less Demand

“What’s happening is that signs of an economic recession are tending to support the dollar in the near term,” explained Gary Dorsch, a senior money market analyst for LNS Financial Group Inc. in Chicago. “Right now, the psychology is that as the economy slows in the United States, there will be less demand for foreign imports, which will reduce the U.S. trade deficit and support the dollar.”

A rally in the bond market also boosted the American currency, Holland said. He said foreigners are likely to buy bonds as the market strengthens, and would have to convert their currencies to dollars to do so.

In Tokyo, where the global trading day begins, the dollar fell to 128.55 Japanese yen from 128.60 late Thursday. The dollar traded at 128.75 yen in London. Later, in New York, the dollar stood at 129.35 yen, up from 128.25.

In London, one British pound cost $1.7595 late Friday, unchanged from late Thursday. Sterling fetched $1.7530 in New York, down from $1.76775 Thursday.

Other late dollar rates in New York, compared with late Thursday, included: 1.7025 West German marks, up from 1.68625; 1.3950 Swiss francs, up from 1.37975; 1.2685 Canadian dollars, down from 1.26925; 5.7470 French francs, up from 5.6925, and 1,252.00 Italian lire, up from 1,241.50.

Late dollar rates in Europe compared with late Thursday: 1.6940 West German marks, down from 1.6960; 1.3875 Swiss francs, up from 1.3845; 5.7185 French francs, up from 5.7145; 1.9030 Dutch guilders, up from 1.9025; 1,245.625 Italian lire, down from 1,246.50, and 1.2665 Canadian dollars, down from 1.2715.

On the New York Commodity Exchange, gold bullion for current delivery fell to $439.40 an ounce from $440.40 late Thursday.

In London, gold closed at $439 an ounce, down from Thursday’s $443 and the lowest level this year. Gold closed in Zurich at $441.50 an ounce, down from $443.50.

Earlier, in Hong Kong, gold closed at a bid $450.35 an ounce, up from $442.83 Thursday.

Silver prices also slumped. On the New York Comex, silver bullion for current delivery fell to $6.295 an ounce from $6.398. In London, silver closed at a late bid of $6.32 bid an ounce, down from $6.35 Thursday.