U.S. dollar weaker but off its lows

Press, 26 June 1989, Page 29

U.S. dollar weaker but off its lows

NPZA-Reuter New York The United States dollar closed weaker, but about 100 points above the day’s lows in New York on Friday (early Saturday, N.Z. time). This caused confusion among dealers about its probable direction this week.

Adding to the uncertainty, the dollar broke through key support levels against the mark during its sell-off, but held above crucial chart points against the yen. “We tested critical areas. Dollar/mark went through it, but dollar/yen held. There is no clear dollar sentiment,” said Mr Robert Ryan, corporate exchange manager at the Irving Trust Company. The dollar ignored bond market rumours of an imminent U.S. discount rate, cut to end at 138.80/ 90 yen, down from 139.05/15. However, the dollar’s closing rate was well above the day’s low of 137.65 yen. The dollar also finished at 1.9425/35 marks, down from 1.9495/ 05 on Thursday, but well up from a base of 1.9310 marks scored earlier. Dealers had pinned the key support points for the dollar

as about 1.9360 marks and 137.50 yen. Traders said the recovery from the lows was triggered by nervous short covering as dollar/yen — which has been leading the U.S. currency’s retreat ■ — stood firm at 137.65.

"It depends on Tokyo. If support doesn’t break, we may move back over 139 yen, and towards 1.9550 marks," Mr Ryan said.

The dollar came under renewed downward pressure on Friday morning from U.S. data suggesting that the economy was continuing to lose momentum. Durable goods orders for May slumped 4.2 per cent — the biggest drop since July, 1988 — while personal income and spending figures were both up a slim 0.3 per cent.