CURRENCY : Dollar Mostly Lower; British Pound Dominates Trading
The dollar was generally lower Tuesday as the British pound dominated foreign exchange markets after the release of trade deficit figures in London.
Gold prices rose. Republic National Bank of New York quoted a late bid of $397.25 an ounce, up $2.25 from late Monday’s $395.
The pound surged after the British government announced that its merchandise trade deficit had shrunk 31% in August.
Robert Ryan, a senior currency trader at Irving Trust Co., said the British trade figure was better than expected. Traders who earlier had sold pounds--expecting negative trade news to send the currency lower--turned around and bought heavily Tuesday, he said.
The pound rose to $1.6780 in New York from $1.6720 late Monday. In earlier London trading, the dollar lost more than 1 cent against the pound. It cost $1.6785 to buy one pound in London, up from $1.6668 late Monday.
With September drawing to a close, many traders stayed out of the market.
Gains Against Yen
“Most people are not willing to put their profits on the line,” said Michael McGuinness, an assistant vice president at Harris Trust & Co. in Chicago.
The dollar rose against the Japanese yen in New York. The U.S. currency rose to 134.63 yen from 134.535 yen late Monday. In earlier London trading, the dollar was quoted at 134.65 yen, and in Tokyo, the dollar closed at 134.58 yen, down 0.15 yen.
Other late dollar rates in New York, compared to late Monday’s rates, included: 1.8780 West German marks, down from 1.8817; 1.5895 Swiss francs, down from 1.5910; 6.3915 French francs, down from 6.4030; 1,399.42 Italian lire, down from 1,401.37, and 1.2205 Canadian dollars, up from 1.2195.
Other late dollar rates in Europe, compared to late Monday’s prices, included: 1.8790 West German marks, down from 1.8835; 1.5910 Swiss francs, down from 1.5935; 6.3945 French francs, down from 6.5000; 2.1185 Dutch guilders, down from 2.1230; 1,402.95 Italian lire, down from 1,403.50, and 1.2185 Canadian dollars, down from 1.2211.
Gold prices rose, but dealers said low oil prices kept bullion well below the $400-an-ounce barrier it plunged through last week. Falling energy prices are considered a harbinger of lower inflation, and gold is often bought as a hedge against higher inflation.
Gold rose to $397.30 an ounce on the Commodity Exchange in New York from $395.10.
Gold rose in London to a late bid of $395.30, up from $394.50, and in Zurich climbed to a bid of $395.75, up from $392.
Earlier, in Hong Kong, gold rose $3.01 to close at a bid of $401.16.
Silver rose to $6.166 an ounce on the Comex in New York from late Monday’s $6.107. However, silver fell on the London market, where the metal traded at a late bid of $6.15, compared to $6.16.