NEW YORK, April 19: The dollar meandered against major currencies on Friday, little changed in holiday-thinned trading but moderately supported by the previous day’s rise in US stock prices.
On Thursday, Wall Street shares rose broadly after a combination of better-than-anticipated economic data and corporate earnings sparked investor buying interest.
On Thursday, a Philadelphia Federal Reserve survey showed the regional economy had weakened. Though the figure was poor, analysts had expected a weaker number — prompting currency traders to buy the dollar.
“We’ve just started seeing a foreign exchange reaction to economic releases return now that Iraq has moved somewhat to the back burner,” said Ronald Simpson, senior currency analyst at S&P MMS, an independent market analysis firm in New York.
But the economic figures have hardly favoured further advances in the dollar, Simpson said, echoing other market observers who are troubled by the prolonged weakness in the economy.
“Until we get a clearer picture of the U.S. economy in particular, we will continue to hang around in these ranges, and perhaps test the bottom,” Simpson added.
The euro drifted at the bottom of the session’s tight ranges against the dollar to $1.0875, unchanged from Thursday’s New York close. Sterling was flat against the dollar at 1.5710, with the Swiss franc also little changed versus the greenback near 1.3813 francs.
The dollar bought 119.75 Japanese yen, with the market paying little heed to Japan’s Finance Minister Masajuro Shiokawa, who said the he felt the yen was slightly overvalued, although it was not too divergent from Japan’s fundamentals.
On Thursday, the Dow Jones industrial average rose nearly one per cent to 8,337.65 and the technology-laced Nasdaq Composite Index shot up 2.2 per cent to 1,425.50.
For the week, the Dow rose 1.6 per cent, the Nasdaq gained 4.9 per cent and the Standard & Poor’s 500 index advanced 2.9 per cent. Though the dollar managed to follow equities higher on Thursday, many analysts have been disappointed by the US currency’s lack of reaction to the end of the Iraq war.
“Next week, however, we hope for better times,” wrote Anne Parker-Mills, senior U.S. economist at Brown Brothers Harriman in New York, in a research note to clients.—Reuters
