Dollar Barely Moves Against Mark and Yen
NEW YORK (AP) _ The dollar held steady against the German mark and edged higher against the Japanese yen in thin U.S. trading Wednesday as currency markets awaited a decision from the Federal Reserve on the course of American interest rates.
The dollar fell somewhat against most of the other major currencies.
In late New York trading, the dollar stood at 84.80 yen, just up from 84.74 yen Monday; U.S. financial markets were closed Tuesday for the Fourth of July holiday. The dollar also fetched 1.3795 German marks, remaining on par with Monday’s movements.
``Nothing. Status quo. It was absolutely a nothing day,″ said Pierre Sauvagnat, a vice president at Credit Lyonnais. ``There has been no significant movement.″
In Europe, where there was no holiday Tuesday, the dollar rose against the yen and fell against the mark.
All eyes were on the Fed’s policymaking Federal Open Market Committee, which began a two-day parley Wednesday afternoon. Analysts all over the financial map have been speculating what the Fed will deem as its role in keeping the economy on track.
Recent data have been mixed. But enough indicators point to a slowdown to warrant speculation that the Fed will lower interest rates for the first time since September 1992 to stimulate the economy.
But if rates are lowered, returns on dollar-denominated investments also would decline in comparison with returns elsewhere, reducing demand for the dollar.
Also, Sauvagnat said, lowering interest rates would be a sign that the economy is weaker than thought.
``I don’t think they need to do it right now, yet it may be a political move to help Clinton in a re-election year,″ Sauvagnat said. He referred to speculation that if the Fed cuts rates to avoid a recession, it would improve Alan Greenspan’s chances of retaining his post as Fed chairman when it comes up for review next year.
The market consensus, however, is that the Fed will leave rates unchanged initially, Sauvagnat said.
Analysts speculate that the Fed will want more data on the economy, including Friday’s employment figures, and will either give Greenspan the authority to make a rate move between meetings or put off a decision until its August deliberations.
Even the latest figures from the Johnson Red Book survey showing national retail sales rising in June did ``absolutely nothing″ to move the market, said Victor Polce, a vice president and foreign exchange manager at Commerzbank.
Other late dollar rates in New York, compared with late Monday included: 1.1445 Swiss francs, down from 1.1460; 4.8255 French francs, down from 4.8330; 1,618 Italian lire, down from 1,624; and 1.3688 Canadian dollars, down from 1.3730.
The British pound was quoted at $1.5965, down from $1.5978.
Earlier Wednesday in London, the pound was quoted at $1.5955, down from $1.5963 late Tuesday.
In London, the dollar also was quoted in late trading at 84.94 Japanese yen, up from 84.75 late Tuesday, and at 1.3799 German marks, down from 1.3808.