LONDON, Dec 19: The dollar held steady against other leading currencies on Thursday as the spectre of a war in Iraq and US stock market weakness hung over the market.
The single European currency was being traded at $1.0268 against 1.0270 late on Thursday in New York.
The dollar eased back to $120.93 from 121.11 on Thursday.
Gold prices rallied in response to US sabre rattling toward Iraq, with spot prices climbing to as high as $354 an ounce in Asia, the highest level since March 1997.
There is increased talk about the timing of any conflict between the US and Iraq, said ABN Amro currency strategist Rob Hayward.
The most likely time for any action appears the end of January. This means that the international caution towards US asset markets will remain for a while, he added.
UN weapons chiefs were to brief the Security Council on Thursday on Iraq’s arms dossier under a storm of US and British accusations Baghdad is lying.
Gathering war clouds over Iraq sent share prices sliding for the second day in a row in New York on Wednesday, when the Dow Jones industrials average fell 1.0 per cent and the technology-laden Nasdaq index slumped 2.2 per cent.
But the euro had some own thorns in its side, notably the break-down of wage talks between Germany’s main services union and employers early Thursday, raising fears of the first nation-wide strike by public sector workers in a decade.
Dealers were awaiting US weekly jobless claims figures, November leading indicators, and the December Philadelphia Federal Reserve survey later Thursday.
A speech by US Federal Reserve Chairman Alan Greenspan speech on the economic outlook was also set to garner some attention.
But analysts said that the dollar would be hard-pressed to rebound significantly on the back of the data.
Recent events tend to point to the fragility of US dollar sentiment and the build-up of negative momentum suggests that a succession of US data releases would have to been significantly better than expectations to reverse the recent declines in the greenback, said Commerzbank strategist Kamal Sharma.
The euro was changing hands at $1.0268 from 1.0270 late on Wednesday in New York, 124.15 yen (124.40), 0.6399 pounds (0.6405) and 1.4639 Swiss francs (1.4635).
The dollar was being quoted at 120.93 yen (121.11) and 1.4261 Swiss francs (1.4248).
The pound was at 1.6042 dollars (1.6027), 194.0 yen (194.15) and 2.2879 Swiss francs (2.2837).
On the London Bullion Market, the price of an ounce of gold rose to $349.85 from 339.50 late on Wednesday. —AFP