January 16, 2007 > Dollar falls against major currencies
Dollar falls against major currencies
By J.W. ELPHINSTONE
NEW YORK (AP), Jan 12 _ The dollar slipped against other major currencies Friday as investors took profits after a week of dollar gains and ahead of a long weekend.
In afternoon New York trading, the 13-nation euro bought $1.2915, up from $1.2889 late Thursday in New York. The British pound also rose to $1.9581 from $1.9447.
The dollar weakened against the Japanese currency, falling to 120.35 yen from 120.44 yen. The U.S. currency had risen to a 13-month high of 120.58 yen earlier in Asian trading.
``The dollar made a pretty strong advance this week, especially yesterday after the European Central Bank's interest rate decision,'' said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Conn.
The European Central Bank kept its benchmark interest rate steady at 3.5 percent on Thursday, but kept the door open for an increase in March by vowing to keep a close watch on inflation.
``The dollar's weakness today is mostly profit-taking before the three-day weekend,'' Gilmore said. ``But today's declines aren't really removing any of the bullish sentiment developed in the week.''
U.S. markets are closed Monday for the Martin Luther King Jr. holiday
Better-than-expected economic reports helped to boost the dollar this week. On Wednesday, the Commerce Department reported that the U.S. trade deficit in November narrowed to the lowest level since July 2005.
The Labor Department followed with a report on Thursday that showed the number of workers filing for jobless claims fell sharply last week by 26,000 to 299,000, the first time claims have fallen below 300,000 since the week of July 22.
The Commerce Department said Friday that December retail sales rose by 0.9 percent, the best showing in five months.
The recent upbeat reports have caused the markets to price out any near-term interest rate cuts by the Federal Reserve and to consider the possibility of a rate hike, Gilmore said. The central bank meets again on Jan. 30-31.
Higher rates support a currency by making some assets denominated in that currency more attractive to investors.
Meanwhile, the Bank of England unexpectedly hiked its key interest rate by a quarter point to 5.25 percent, saying the hike was necessary to rein in inflation.
In other trading, the dollar bought 1.2481 Swiss francs, down from 1.2498 late Thursday, and 1.1697 Canadian dollars, down from 1.1767.