P.M. BRIEFING : Tax Talk Undermines Dollar
The U.S. dollar fell against major European currencies today in the wake of President Bush’s announcement that tax revenue increases will be part of any moves to reduce the U.S. budget deficit.
Although the President did not specifically say taxes would rise, dollar selling was high in Europe, as any attempt to reduce the budget deficit was seen by dealers as a move toward lower interest rates in the United States.
In Frankfurt, the dollar opened down at 1.6625 deutsch marks against 1.6770 at close Tuesday.
The dollar was down in Zurich at 1.4005 Swiss francs against 1.4125 at the previous night’s close.
In London, sterling was steady, supported by high U.K. interest rates, but dealers said there are signs that it is waning. The pound opened higher at $1.7430 compared to $1.7375 Tuesday.
The dollar also opened lower in Paris, Brussels and Milan.