LONDON, Dec 16: The dollar remained pinned to the back foot against other leading currencies on Monday as concerns about the bleak global economic outlook and geopolitical tensions continued to weigh on sentiment.
The euro traded at $1.0214, down slightly from 1.0236 late on Friday in New York.
The dollar crept up to 120.98 yen from 120.54 on Friday, after sliding sharply at the end of last week.
Gold prices continued to head north on the back of a weak dollar and geopolitical concerns, climbing to $334.25 per ounce on the London Bullion Market from $331.85 late on Friday.
We’ve got the dawning realisation that 2003 is going to be just as bad (for the US economy and stocks) as 2002 and that’s helping drive dollar sentiment, said Commerzbank currency strategist Nick Parsons.
The dollar’s going to go down but it’s going to do so in fits and starts. The Japanese authorities have tried to draw a line under dollar/yen which has helped to stabilise the dollar a bit, Parsons said.
He said a number of Japanese government officials had earlier given a clear indication of their unwillingness to see the yen appreciate much beyond present levels.
Among them was senior vice finance minister Takayoshi Taniguchi, who warned that if the yen rose further, the authorities would take “decisive action”.
Parsons said: The Japanese play the currency markets better than anyone else in the world. They’ve made roughly $110 billion profit from intervention in the last ten years so you don’t bet against them.
Neil Mackinnon, chief economist at debt and currency managers ECU Group, said Japan’s Ministry of Finance will be desperate to keep the dollar above 120 yen.
Parsons said grim euro-zone economic data, such as Italian industrial output figures released Monday, had reinforced his belief that the ECB will cut rates again early next year.
Italian industrial output dropped an unexpectedly sharp 2.1 per cent in October from the same month a year earlier, the country’s statistics office said.
The euro was changing hands at $1.0214 from 1.0236 late on Friday in New York, 123.50 yen (123.45), 0.6431 pounds (0.6438) and 1.4767 Swiss francs (1.4769).
The dollar was being quoted at 120.98 yen (120.54) and 1.4465 Swiss francs (1.4428).
The pound was at $1.5870 (1.5891), 192.03 yen (191.51) and 2.2973 Swiss francs (2.2937).
On the London Bullion Market, the price of an ounce of gold rose to $334.25 from 331.85 late on Friday. —AFP