clock menu more-arrow no yes

Filed under:

BAD ECONOMIC NEWS TAKES STEAM OUT OF DOLLAR

The dollar fell against most other currencies Friday after the Labor Department released surprisingly gloomy news on unemployment and traders anticipated a cut in interest rates. Gold prices rose.

"Today's economic news was enough to make the dollar give up all the steam it got in the previous session," said Hillel Waxman, chief currency trader at Bank Leumi Trust Co. in New York.The Labor Department said the nation's unemployment rate fell slightly in August to 7.6 percent but employers cut 83,000 non-farm jobs from their payrolls.

A temporary summer jobs program for teens helped the August unemployment rate ease, but adult joblessness worsened slightly, and the economy lost thousands of key manufacturing jobs.

In response to the report, the Federal Reserve cut its target for the federal funds rate - the fee commerical banks charge each other on overnight loans - to 3 percent from 3.25 percent.

The move caused little reaction in currency markets because investors expected it after the jobless report, traders said.

Italy, meanwhile, raised its discount rate 1.75 points to 15 percent, and dealers said that both the German Bundesbank and the Bank of Italy intervened in currency markets to support the lira.

In New York, the dollar fell to 1.4015 German marks from 1.4135 late Thursday. In Europe, the dollar was quoted at 1.4040 marks, down from 1.4130 late Thursday. Before the U.S. unemployment report, the dollar had been trading at around 1.4300 marks in Europe.

In New York, the dollar was quoted at 123.15 Japanese yen, down from 123.80 late Thursday. In London, the dollar was quoted at 123.20 yen. Earlier, in Tokyo, the dollar closed at 124.15 yen, up 1.12 yen from Thursday's close.

In New York, the British pound was quoted at $1.9960, up from $1.9835 late Thursday.