US dollar firm

Press, 25 August 1986, Page 26

US dollar firm

PA New York The American dollar gained ground against most major foreign currencies on Friday as U.S. interest rates rose slightly in response to good economic news.

Gold fell in the United States after a mixed performance in Europe. Re-

public National Bank in New York quoted gold bullion as at U. 5.374.25 U.S. dollars a troy ounce, down $lO.OO from Thursday’s close. The dollar was bolstered partly by higher interest rates in the bond market after the Commerce Department’s report that U.S. durable goods orders rose 4.3 per cent in July, the biggest gain since 1984. Although most economists believe the U.S. economy remains sluggish, the report was seen as a sign of a possible economic revival.

A stronger economy tends to push interest rates higher, which in turn improves the attractiveness of dollar-denomi-nated investments. But dollar gains.were slight and occurred in relatively quiet markets, analysts said, mirroring the continued bearish sentiment on the currency. “You would have thought the market would have been excited about it,” spid Ross Taylor, a trader for PrudentialBache Securities Inc. “The currency markets remain convinced the dollar’s running lower, despite whatever short term reversals.”

Taylor said although West Germany and Japan have kept resisting calls for them to cut their interest rates, the market believed the United States would keep weakening the dollar to force their hand.