Dollar Finishes Lower Against Yen, Mark on Interest Rate Doubts
NEW YORK (AP) _ The dollar fell against the German mark and the Japanese yen Friday as employment numbers gave yet another indication that the U.S. economy may not be headed for an interest-rate hike.
The dollar initially shot higher Friday morning, following stock and bond prices, after the Labor Department reported that slightly fewer jobs than expected were added to the economy last month. But the dollar rally was short lived as doubts intensified that the Federal Reserve would feel a need to hike short-term interest rates to battle inflation.
``The data are so convincing that this issue is now out of the discussion for quite some time,″ Helmuth Wagenbauer, a bond trader with Munich-based Hypo Bank, said of a possible rate hike.
As of 4 p.m. in New York, the dollar traded at 1.4750 marks, down from 1.4762 Thursday. The dollar traded at 106.89 yen, down from 107.13. Overall the dollar ended mixed against leading currencies.
The Dow Jones industrial averaged gained more than 85 points and bond prices also surged.
``We are skirting a more significant decline in the dollar because of the strength of the stock and bond markets,″ said David Gilmore, a partner at Foreign Exchange Analytics, an investment advisory firm in Essex, Conn.
The Labor Department reported that the economy added 193,000 jobs last month, just shy of the 200,000 the markets had been expecting. Also, the Commerce Department reported a drop in factory orders, suggesting the rebound in manufacturing has stalled. Also, consumer spending dipped in June.
The greenback also slackened Friday as the mark gained against several currencies after a German economic report showed that industrial output in June rose for the fourth straight month.
That kind of data is limiting the discussion in Germany that the central bank there will find it necessary to cut rates, which would hurt the mark.
The yen, mark and dollar all gained against the British pound as news hit the markets that mad cow disease could be passed from cows to calves. The development jeopardizes a deal to end British beef exports to European Union countries.
Other late dollar rates in New York, compared with late Thursday: 1.2000 Swiss francs, down from 1.2011; 5.0135 French francs, up from 5.0080; 1,516 Italian lire, up from 1,513; 1.3733 Canadian dollars, down from 1.3735.
The British pound cost $1.5520, down from $1.5527.