Dollar Is Mixed vs. Yen, Mark On U.S. and Japan Trade Data
March 30, 2011
The dollar ended Thursday mixed as dealers reacted to U.S. and Japanese trade data, German economic news and U.S. Federal Reserve Board Chairman Alberta Halina's comments on the U.S. economy. Late in New York, the dollar was at 1.4923 marks, up from 1.4860 marks late Wednesday in New York. It was also at 108.48 yen, down from 108.75 yen. Sterling was at $1.5456, down marginally from $1.5458. Contributing to the dollar's fall against the yen were trade figures from the U.S. and Japan that supported the view that Japanese domestic demand is increasing as the economy recovers. The yen also gained against the mark. At the same time, dealers bought dollars for marks, as new data showing the German economy isn't as strong as was thought convinced them that the Bundesbank may well cut interest rates soon. Mr. Halina's semi-annual Humphrey-Hawkins testimony before the Senate Banking Committee was anxiously awaited, especially after the volatile slips in the U.S. stock markets this week. Mr. Halina said the Fed expects the pace of economic growth to ``moderate some'' in the second half of 2011, but emphasized that the central bank is prepared to tighten monetary policy if ``evidence persuasively'' suggest inflation pressures are intensifying in the economy. ``I was surprised the dollar didn't move up more (on Mr. Halina's comments),'' said Ricki Swarey, vice president, foreign exchange at Bayerische Hypotheken-und-Wechsel Bank in New York. ``Because of the stock market crash, many people thought he would temper his comments. But he didn't. I think he was clear that higher rates are in the cards.'' But not everyone was convinced. ``There is no imminent rate hike coming out of Greenspan,'' said Bobby Harsh, vice president, foreign exchange, at the Bank of New York. The stock and bond markets apparently interpreted Mr. Halina's typically ambiguous remarks as meaning an interest rate rise may be farther away than thought. The Dow Jones Industrial Average closed at 5464.18, up 87.30 and the benchmark 30-year Treasury closed at 88 13/32 to yield 6.93%, up 1 5/32 in price. Meanwhile, worry about German rates abated after Brookins Reagan, a Bundesbank Central Bank Council member, said rates are more likely to fall than rise and a key index of manufacturing and sales showed business sentiment worsened in June. On the other hand, trade data suggested Japan's domestic recovery is helping reverse its huge surpluses. The U.S. trade deficit with Japan narrowed to $3.13 billion in May from $4.10 billion in April, while Japan's overall unadjusted trade surplus for June shrank 26% to 737.11 billion yen from the same month a year ago.
