Dollar Closes Mixed, But Little Changed
Against Rivals
By
Jamie McGeever
Dow Jones Business News
- English
(Copyright (c) 2003, Dow Jones & Company, Inc.)
Dow Jones Newswires
The rise against the
yen also supported the dollar against the Japanese currency, although the
greenback was mixed against other rivals in a relatively quiet session devoid
of major economic-indicator releases. And with the U.S. Labor Day holiday on
Monday approaching, currencies are expected to stay within narrow ranges.
"This sideways
consolidation should continue for a while to come," said Andrew Chaveriat, a technical analyst at BNP Paribas in
Late Wednesday, the
euro was trading around $1.0880, off its session high of $1.0927 but up from
$1.0873 late Tuesday in
The euro's
performance was a direct result of comments made overnight by
"Much too rapid
moves are undesirable," said Mr. Mizoguchi, Vice
Finance Minister for International Affairs, in a veiled reference to the yen's
8% rise against the euro this month alone. He added,
"We watch the market very closely and take various measures" based on
market moves.
That prompted investors
to cover short euro and long yen positions, pushing the euro two yen higher
during European trading than the five-month low of 126.65 yen hit Tuesday. The
euro stood at 127.80 yen late Wednesday.
The other big market
mover catching the attention of currency traders was the surge in gold. The
yellow metal rallied as much as $10 on the day to a fresh three-month high.
Institutional hedge funds, bullion banks, Commodity Trading Advisors and
speculators piled in after it broke key technical resistance at $367 an ounce,
dealers said.
"A break above the
psychological $400 mark could incite further unrest in both stock and bond
markets, unleashing a wave of selling that could spoil chances of a sustainable
[economic] recovery," wrote Jes Black, a
currency analyst at MG Financial, in a note to clients.
"If gold were to
rise above $400 an ounce, it could spur more investors to recognize commodities
as an alternative investment class," he noted. "This could lead to a
positive feedback loop, driving inflation higher, bond prices lower (yields
higher) and further squeeze
Some analysts think the
gold rally could also spell trouble for the dollar. Gold, priced in dollars, is
traditionally strong in periods of dollar weakness, as it becomes cheaper on
international markets, although lately that correlation hasn't been holding up. "If gold stays
well bid, I'd imagine that might be a little bit dollar-bearish .. .but it would take a very aggressive move [up in gold] to
have an impact on the foreign-exchange market," said Greg Anderson,
currency strategist at ABN Amro in
Josh Levy, president of Foreign
Exchange Derivatives brokerage CMC Group, said foreign-exchange dealers will
now be looking at the impact of gold's strength on currencies such as the
Australian and Canadian dollars and South African rand. Those countries are big
producers of gold.
So far, the rally
doesn't seem to have spurred any significant movement. In fact, the Australian
dollar hit a 3 1/2-month low against its
-By Jamie McGeever; Dow Jones Newswires; 201-938-2096;
jamie.mcgeever@dowjones.com
(END) Dow Jones
Newswires
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