CURRENCY : Dollar Slips as Traders Await Deficit Report

The U.S. dollar edged down Tuesday in uncertain trading before today’s report on the nation’s merchandise trade deficit for September.

Gold prices rose. Republic National Bank of New York quoted a late bid of $423 an ounce, up from $422.85 late Monday.

Forecasts of the trade deficit ranged widely from $9 billion to $11 billion. Traders said any number above the range would likely drive the dollar lower, while a lower figure probably would spark a rally.

“Eight or 12 (billion dollars) is clearly going to move the markets,” said Wayne Lyski, a portfolio manager of Alliance Capital Management in New York.

Trade deficits and the markets’ reaction to them are notoriously difficult to predict. Currency dealers said sentiment toward the dollar is predominantly bearish, and any rally caused by a good trade number might be quickly swamped by a wave of selling.

The trade deficit in August was $12.2 billion.

Foreign exchange dealers said the dollar was helped slightly by the government’s report of a 0.9% rise in retail sales in October. Strong economic growth attracts investors to dollar-denominated securities.

The market shrugged off a 0.4% advance in industrial production in October, which fell within expectations, traders said.

In contrast with other recent sessions, there were no reports of intervention by central banks to support the dollar. The dollar had rallied Monday on the strength of central bank purchases and reassuring statements from officials of the United States, Japan and West Germany.

In Tokyo, the dollar rose to 123.25 Japanese yen from 123.00 yen Monday. Later in London, the dollar traded higher at 123.40 yen. In New York, the dollar fell to 123.23 yen from 123.75 yen.

In London, one British pound fell to $1.8060 from $1.8090 late Monday. Later in New York, the pound rose to $1.8083 from $1.8074.

Other late dollar rates in New York, compared to late rates Monday, included: 1.7433 West German marks, down from 1.7465; 1.4626 Swiss francs, down from 1.4665; 1.2337 Canadian dollars, up from 1.2313; 5.9535 French francs, down from 5.9635, and 1,297.00 Italian lire, down from 1,300.25.

Other late dollar rates in Europe, compared to late rates Monday, included: 1.7465 West German marks, up from 1.7452; 1.4630 Swiss francs, down from 1.4645; 5.9660 French francs, up from 5.9615; 1.9685 Dutch guilders, down from 1.9735; 1,300.50 Italian lire, down from 1,303.50, and 1.2344 Canadian dollars, up from 1.2297.

Gold prices moved higher, but traders said there wasn’t enough interest to sustain a big rise.

In Hong Kong, gold closed at $424.07 an ounce, up from $422.51 late Monday. Gold closed in London at $423.75, up from $420.95. The late Zurich, Switzerland, price was $423.00, up from $420.00.

On the Commodity Exchange in New York, gold bullion for current delivery rose to $424.40 from $423.90 at Monday’s close.

Silver bullion rose in London to $6.41 an ounce, up from $6.39 late Monday. On New York’s Comex, silver bullion for current delivery fell to $6.368 from $6.418 Monday.