CURRENCY : Dollar Advances; Gold Prices Decline

The dollar rose against most major currencies except the Canadian dollar in hectic Thursday trading that was marked by uncertainty over the significance of a report on the trade deficit.

Gold prices fell. Republic National Bank of New York said gold was bid at $443.40 an ounce as of 4 p.m. EST, down from $445 an ounce late Wednesday.

The Commerce Department reported Thursday that the merchandise trade deficit widened slightly to $12.4 billion in January from $12.2 billion in December. Many traders had expected a trade deficit in the range of $12.8 billion.

The dollar climbed immediately after the report’s 8:30 a.m. EST release, but then went into a slide and was down from Wednesday’s levels by late morning.

Psychology shifted near midday and the dollar marched ahead, finishing the day 1% higher against the Japanese yen and West German mark.

Traders Uncertain

The dollar fell slightly against the surging Canadian dollar, partly in reaction to news that the U.S. deficit with Canada had widened to more than $1 billion in the month.

The Canadian dollar rose to more than 80 U.S. cents for the first time since Feb. 24, 1984.

“It was a hectic day. Very hectic,” said Hubert Pedroli, manager of corporate foreign exchange for Credit Suisse in New York.

Pedroli said traders were left uncertain by the trade numbers because even though imports fell, which was seen as good news, exports also fell.

In Tokyo, where the market closed before the trade figures were announced, the dollar dipped to a closing 127.43 yen from 127.49 yen at Wednesday’s close. In later London trading, it was quoted at 128.15 yen. At the end of the trading day in New York, the dollar rose to 128.75 yen from 127.46 late Wednesday.

Pound Falls

In London, the dollar gained more than one cent against the British pound. One pound cost $1.8385 in London late Thursday, down from $1.8505 late Wednesday. Later, in New York, the dollar strengthened to $1.8330 for a pound from $1.8493 late Wednesday.

The pound began falling Thursday morning after major banks cut their base lending rates to 8.5% from 9%.

Other late dollar rates in New York, compared to late Wednesday’s rates, included: 1.6917 West German marks, up from 1.6740; 1.4045 Swiss francs, up from 1.3854; 1.2493 Canadian dollars, down from 1.2535; 5.7455 French francs, up from 5.6890; and 1,252.50 Italian lire, up from 1,242.00.

Other late dollar rates in Europe, compared to late Wednesday’s rates, included: 1.6775 West German marks, up from 1.6690; 1.3940 Swiss francs, up from 1.3810; 5.7175 French francs, up from 5.6782; 1.8885 Dutch guilders, up from 1.8750; 1,244.37 Italian lire, up from 1,238.45; and 1.2493 Canadian dollars, down from 1.2518.

Gold prices eased in sluggish trading as the dollar’s rise made gold less attractive to investors.

Gold fell in London to a late bid of $443 an ounce, compared to late Wednesday’s $446.20. In Zurich, it closed at a bid $445, slightly lower than $445.25 late Wednesday. On the Commodity Exchange in New York, gold bullion for current delivery was bid at $444.90 an ounce, down from $445.30 Wednesday.

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