CURRENCY : Dollar Stages Rebound in U.S. Trading

The dollar staged a turnaround in domestic trading Thursday, as technical factors pushed the currency higher after it lost ground earlier overseas.

Gold prices rose. In New York, Republic National Bank quoted bullion at $445.25 an ounce as of 4 p.m. EDT, up from $444.40 on Wednesday.

The dollar fell fractionally against most major currencies in sluggish European trading, but investors’ appetite for the U.S. currency was revived when activity shifted to U.S. markets.

“Initially people tried to push the dollar down (in domestic trading), but then we saw a big correction up,” said David Godwin, chief foreign exchange dealer at Union Bank of Switzerland in New York.

He attributed the move in part to comments by Federal Reserve Governor Manuel Johnson that the nation’s trade deficit would improve. The Commerce Department is scheduled to release its merchandise trade report for April on May 17.

Despite the dollar’s move upward, the currency remained within the relatively tight range it has been trading in for several weeks. “People have the feeling that the central banks will be there if (investors) drive the dollar too low, but there’s not a big willingness to buy because of fear of inflation and the trade number,” said Earl Johnson, a vice president at Harris Trust & Savings Bank in Chicago.

A Novelty Value

Dealers are hoping today’s release of U.S. unemployment data for April will stimulate the market.

A trader at a Japanese bank in London noted that while the market typically does not react to employment data, today’s announcement “will have a novelty value in the sense that we have been so starved of things to do this last week.”

In London, the dollar was quoted at 124.32 Japanese yen, compared to 124.95 late Wednesday. Banks and other financial institutions were closed in Japan because of a national holiday. In New York, the dollar closed at 124.905 yen, up from 124.68 yen.

One British pound cost $1.8665 in London late Thursday, more expensive for buyers than late Wednesday’s $1.8650. In New York, it cost $1.8625 to buy one pound, less expensive than $1.86525 on Wednesday.

Other late dollar rates in New York, compared to late Wednesday, included: 1.68405 West German marks, up from 1.67785; 1.4035 Swiss francs, up from 1.39725; 5.7275 French francs, up from 5.7020; 1.23365 Canadian dollars, down from 1.23555, and 1,258.00 Italian lire, up from 1,249.50.

Bullion Advances

Late dollar rates in Europe, compared to late Wednesday, included: 1.6780 West German marks, down from 1.6796; 1.3955 Swiss francs, down from 1.4000; 5.7052 French francs, down from 5.7075; 1.8790 Dutch guilders, down from 1.8840; 1,253.25 Italian lire, up from 1,250.50, and 1.2333 Canadian dollars, down from 1.2353.

Meanwhile, on the New York Commodity Exchange, gold closed at $445.40 an ounce, up from $444.80 on Wednesday.

Traders in Europe said bullion will remain in a narrow range barring news from the Persian Gulf or the U.S. economy.

In London gold rose to a bid $445.25 from late Wednesday’s $444. In Zurich, Switzerland, the bid price was $445.50, up from $443.50. Earlier in Hong Kong, gold rose $2.36 to close at a bid $447.07.

On New York’s Comex, silver finished at $6.327 an ounce, down from $6.35. In London, gold was quoted at $6.37, up from $6.35.

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