clock menu more-arrow no yes

Filed under:

DOLLAR CAPS OFF IMPRESSIVE WEEK, GAINS ON MAJOR FOREIGN CURRENCIES

The dollar capped a buoyant week on a positive note in slow trading Friday, edging higher against major foreign currencies as traders played it safe ahead of the summer week-end.

Underpinning the U.S. currency were investor concerns that major central banks, bolstered by their successful intervention earlier this week, may again join forces to buy billions of dollars to prop up the greenback.The Federal Reserve and the central banks of Japan, Germany and Switzerland bought dollars Tuesday in a coordinated action that took the U.S. currency to six-month highs against the German mark and Japanese yen.

"The dollar is generally supported by the idea that central banks aren't too far away from another intervention," said Michael Faust, a foreign exchange strategist at Bailard, Biehl & Kaiser, a San Mateo, Calif., money-management firm.

The dollar initially fell in overseas trading Friday, which ends before New York's session, in a follow-through to a dollar slump on Thursday. Investors had dumped dollars after a government report that the U.S. trade deficit ballooned to an unexpected $11.31 billion in June.

But by late Friday in New York, the dollar was quoted at 97.40 Japanese yen, up from 97.05 late Thursday. In London, the dollar had been quoted at 96.88 Japanese yen, down from 97.83.

The dollar also was changing hands in New York at 1.4760 German marks, up from 1.4728 marks late Thursday.

A week ago, the dollar bought 93.85 yen and 1.4382 marks.

Despite the dollar's impressive gains this week, several market players remained worried about fundamental issues marring the U.S. economy, including the persistent trade deficit.

Trade deficits raise the possibility of bigger dollar supplies flooding currency markets. Dollars spent on imports leave foreigners with greenbacks that have to be exchanged for their own money.

Other late dollar rates in New York, compared with late Thursday: 1.2235 Swiss francs, up from 1.2205; 5.0560 French francs, up from 5.0460; 1,629 Italian lire, up from 1,622; and 1.3588 Canadian dollars, down from 1.3603.

The dollar rose against the British pound, with sterling quoted at $1.5404, down from $1.5455. Earlier in London, the pound had risen to $1.5440 from $1.5341 late Thursday.