LONDON, Oct 14: The dollar wobbled on Monday as renewed terrorism fears after the Bali bomb overshadowed a rebound on Wall Street last week, though trading was muted owing to public holidays in Japan and the United States.
The single European currency rose to $0.9881 from 0.9872 late on Friday in New York.
The dollar dipped to 123.97 yen from 124.01 on Friday.
Dealers said the US unit was being cushioned from the full fallout of the weekend bombing on the Indonesian island of Bali because of holiday trading conditions in Japan and the United States.
US bond markets were closed Monday though equity markets were open.
What we expect is the dollar to come under renewed pressure after the terrorist attacks we saw in Bali over the weekend. It’s going to keep the risk aversion at a higher level, said BNP Paribas economist Ian Stannard.
He added that there were also renewed concerns about the US economy after a weaker-than-expected survey of US consumer sentiment by the University of Michigan published on Friday.
Stannard said that weakness in global equity markets should prompt troubled German financial institutions to repatriate funds, giving the euro a further boost.
Ray Attrill, head of research at economic consultancy 4Cast, said that there had been some knee-jerk buying of the Swiss franc on the back of the Bali bombing.
The Swiss franc was a little stronger in Asia on the back of the Bali bombing but failed to keep its momentum. The markets have yet to assess what the bombing means for the economic recovery prospects, he said.
Many regional currencies in Asia slumped against the dollar amid growing fears investment in Southeast Asia would be hit by the blasts.
The bomb blasts illustrate the risks involved in many countries in Asia, particularly Southeast Asia, Standard Chartered Bank’s regional economist Steve Brice said.
Therefore, just as we were starting to expect Southeast Asia outperformance, these developments may reinforce the perception... that Northeast Asia is better placed in terms of their risk-return profile than Southeast Asia, he said.
The euro was changing hands at 0.9881 dollars against 0.9872 late on Friday in New York, 122.50 yen (122.45), 0.6329 pounds (0.6319) and 1.4620 Swiss francs (1.4633).
The dollar was being quoted at 123.97 yen (124.01) and 1.4794 Swiss francs (1.4823).
The pound was at 1.5614 dollars (1.5625), 193.60 yen (193.81) and 2.3107 Swiss francs (2.3166).
On the London Bullion Market, the price of an ounce of gold rose to $318.65 from 317.25 late on Friday. —AFP