The dollar drifted upward against most currencies on Friday as investors consolidated their positions before the weekend and expressed renewed confidence about the strength of the U.S. economy compared to Europe.
Gold prices were mostly lower. On the New York Commodity Exchange, gold for current delivery closed at $368.70 a troy ounce, off 40 cents from Thursday. At 4 p.m. EDT, Republic National Bank of New York quoted gold at $368.50 a troy ounce, down 50 cents from Thursday.Traders said the dollar, which dropped Thursday after a strong rise, was resuming its two-week-long climb against European currencies.
"The market got too aggressive buying the dollar yesterday," prompting the correction, said Bob Ryan, a vice president at Bank of New York. "All today was was a resumption of the trend."
Traders said the market remained bullish on the dollar, especially since the U.S. economy was gaining strength and European economies remain mired in recession. They said there is still pressure on European interest rates to drop, while U.S. interest rates may rise with the recovery.
"There's a subtle shift in economic strength here going in favor of the U.S. dollar," said Ryan.
He said the dollar's rise was supported by a 2.5-point increase in the monthly index of regional business activity measured by the Purchasing Management Association of Chicago. The survey was seen as a sign of what the national index released next Monday may show.
Frank Pusateri, a vice-president at Bank of Boston, said the dollar's increase was due in part to short-covering by investors. In other words, as the dollar rose recently, investors sold dollars they didn't own. They then purchased the dollars at lower prices.
In Tokyo, where the trading day began, the dollar closed at 108.23 yen, down 0.22 yen from Thursday's close. Later in London, it rose to 108.38 yen. In New York, the dollar finished at 108.55 yen, up from 108.18 yen on Thursday.
Other dollar rates in New York late Friday, compared with Thursday: 1.6860 German marks, up from 1.6750; 1.4920 Swiss francs, up from 1.4785; 5.9060 French francs, up from 5.8585; 1,644.00 Italian lire, up from 1,626.00; and 1.3204 Canadian dollars, up from 1.3228.
Gold fell in London to a late bid price of $368.95 a troy ounce, compared with $369.05 bid late Thursday. In Zurich, the metal rose to a late bid of $369.70, compared with $368.25 bid late Thursday.