CURRENCY : Dollar Is Mixed in Light Trading as Gold Advances

The dollar finished mixed Monday in mostly light trading, as some dealers sold the currency in anticipation of today’s report on the U.S. trade deficit for June.

Gold prices rose. Republic National Bank of New York quoted a late bid of $432.35 an ounce, up from $431 late Friday.

The dollar started the trading day by falling in the Far East, then recovering from its early lows to finish little changed in Europe. The dollar retreated anew against several key currencies in later New York trading.

Analysts attributed that decline mainly to dollar sales by traders balancing their dollar-heavy positions before the latest of the monthly trade reports, which tend to strongly influence the U.S. currency’s movements. A negative trade performance usually sends the dollar lower, and vice versa.

“We had some slight lightening of long dollar positions,” said Robert Hatcher, a vice president of corporate trading at the New York office of Barclays Bank PLC of Britain.

Helped by Rate Hike

Traders are reluctant to hold big dollar positions because of the possibility of a surprise in the June figures. Many traders and economists expect a shortfall of $10.5 billion to $12.5 billion. The trade deficit was $10.9 billion in May.

Dealers said the dollar was supported, on the other hand, by the continuing impact of last week’s unexpected hike to 6.5% in the Federal Reserve’s discount rate, the interest it charges on loans to member U.S. financial institutions. Rising U.S. interest rates make dollars more valuable.

The dollar was scarcely affected by the news Monday that U.S. industrial production shot up 0.8% in July, the biggest increase in nine months, market watchers said.

“All the traders are waiting for the next direction in the dollar” from the trade figures, said David Godwin, a dealer for Union Bank of Switzerland.

In Tokyo, where trading ends as Europe’s business day begins, the dollar traded at 132.95 Japanese yen, down 0.10 yen from Friday’s close. Later, in London, it was quoted at 133.15 yen. By the end of New York trading, the dollar was at 133.32 yen, up slightly from 133.28 yen late Friday.

In London, it cost $1.7145 to buy one British pound, cheaper than $1.7155 late Friday. Later, in New York, the pound remained steady at $1.7145, more expensive than $1.7130 late Friday.

Gold Prices Seesaw

Other late dollar rates in New York, compared to late Friday’s rates, included: 1.8805 West German marks, down from 1.8833; 1.5790 Swiss francs, up from 1.5777; 6.3760 French francs, down from 6.3965; 1,394.75 Italian lire, down from 1,397.50, and 1.2270 Canadian dollars, up from 1.2111.

Late dollar rates in Europe, compared to late Friday, included: 1.8810 West German marks, up from 1.8805; 1.5780 Swiss francs, up from 1.5750; 6.3780 French francs, down from 6.3810; 2.1257 Dutch guilders, up from 2.1146; 1,398.00 Italian lire, up from 1,395.50, and 1.2196 Canadian dollars, up from 1.2195.

Gold fell in London to a late bid of $430.40, compared to late Friday’s bid of $431.50. In Zurich, Switzerland, gold fell to a bid $431 from $432.50.

Earlier, in Hong Kong, gold closed at $433.80, up from Saturday’s finish of $430.68.

On the New York Commodity Exchange, gold for current delivery rose to $433 from $431.30 late Friday.

Silver bullion prices dipped in London to a late bid price of $6.72 an ounce from $6.73 late Friday.

On New York’s Comex, silver for current delivery rose to $6.757 from $6.712.

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