Volatile week for American dollar

Press, 20 August 1984, Page 30

Volatile week for American dollar

The United States dollar was particularly volatile last week, especially against the Deutschmark, which had a trading range of 2.9270 to 2.8450, says the Westpac Banking Corporation in its weekly currency report. Over all the American dollar has weakened significantly because of slightly lower United States interest rates and market expectations that the pace of United States economic growth may be slowing somewhat. However, the barrage of economic data released last week has only served to further confuse the market, said Westpac, with July retail sales down 0.9 per cent the market expectation was a rise of 0.4 per cent, and July business inventories up 0.3 per cent the expectation was an Increase of 0.6 per cent supporting the theory of slowing American economic growth. But July industrial production, up 0.9 per cent against market expectations of a 0.5 per cent rise, contradicted this view. On

balance, we believe the underlying strength of the United States dollar should remain, supported by high American interest rates and the record American Budget deficit,” said Westpac. Sterling continued to be underpinned by steady spot oil prices, despite rumours

that" interest rates might be cut by another 1 per cent shortly. Westpac expects the trading range next week to be 1.4050 to 1.4250. The Japanese yen has been more volatile with a trading range qf 239.70 to 244.30, the bank said.