$US through 2 mark level
NZPA-Reuter New York The United States dollar closed sharply higher on Friday (local time) after soaring on a large gain on the United States producer price index and a surging bond market. The May PPI at 0.9 per cent was almost double market expectations. The PPI rise alleviated some market fears that the Federal Reserve Board would ease further. The dollar also rallied in concert with the bond market, both fuelled by heavy Japanese buying.
The dollar ended at 2.0105/15 Deutsche marks and 146.60/70 yen, considerably higher than the 1.9693/00 Deutsche marks and 143.10/15 yen close on Thursday.
“All United States assets are extremely attractive at the moment,” said Mr Graham Broyd, vice president at Manufacturers Hanover Trust Co. The PPI report "should have destroyed the bond market” but instead Treasuries rallied, indicating strong demand, he said.
Investment flows out of Asian countries close to China continue to bolster the dollar.
The dollar is expected to climb further this week, with some dealers looking for it to rocket to new recent highs and others predicting a retracement at slightly higher levels. During much of last week the dollar was in a tug-of-war between the Far East, which tended to boost the United States currency on concern over the turmoil in China, and the United States and European markets which pushed the dollar lower on worries that United States interest rates were headed even lower, a trader said. The market would now try to propel the dollar through 2.0150 Deutsche marks, one dealer said. If successful, the dollar would then test 2.02 Deutsche marks, the trader said.
Sterling closed at $U51.5465/75, compared with 1.5785/95 at Thursday’s finish.
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Press, 12 June 1989, Page 28
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281$US through 2 mark level Press, 12 June 1989, Page 28
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