The Wall Street Journal-20080119-Dollar Advances Against Euro
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Dollar Advances Against Euro
The dollar rose Friday against its European rivals as a decline in U.S. stock markets from negative corporate-earnings news and swirling economic worries sent investors scurrying for the sanctuary of the dollar.
Ahead of a three-day weekend, the dollar also found modest support from a University of Michigan consumer-sentiment survey that showed surprising improvement in January.
Monday is a national holiday in the U.S. to honor Martin Luther King Jr.
The weak stock markets didn't help the dollar on all fronts, however. Against the yen, the dollar was unchanged Friday as carry- trade investors, who borrow the low-yielding yen to fund riskier bets on higher-yielding currencies, reversed their bets.
The dollar fell as low as 106.35 yen, though it bounced back late in the New York session. The euro also fell against the yen, at one point hitting a four-month intraday low of 155.69 yen.
Friday afternoon in New York, the euro was at $1.4617, down from $1.4657 late Thursday. The dollar was unchanged at 106.68 yen. The euro was at 155.94 yen, down from 156.51 yen. The pound was at $1.9544, down from $1.9700, and the dollar was at 1.0995 Swiss francs, down from 1.0997 francs.
Currency markets shrugged off an announcement by President Bush of a fiscal-stimulus plan to rescue the U.S. economy from a downturn. The plan calls for tax incentives for businesses and "direct and rapid" tax relief for individuals.
Foreign-exchange analysts said the plan may temporarily soothe the economic pain, but it doesn't address most of the big problems in the economy: subprime-mortgage issues; a weak housing sector; and a credit crunch.
In a rare positive note on the U.S. economy, the Reuters/University of Michigan preliminary January U.S. consumer-sentiment index released Friday rose to 80.5 from 75.5 in December. Forecasters surveyed by Dow Jones Newswires had expected to see a reading of 74.5.
That report gave the dollar modest support against many of its rivals, but it was mostly offset by a Conference Board report on leading economic indicators, which showed a 0.2% fall in December, a third consecutive decline.
Against the Canadian dollar, the U.S. currency returned toward its four-month high reached Thursday, as lower global prices for oil -- a major Canadian export -- kept the Canadian dollar on the defensive. But the U.S. dollar pared its gains later in the North American session and exited active trading at C$1.0276, compared with C$1.0298 late Thursday.
Meanwhile, the pound fell Friday as retail sales in the United Kingdom declined unexpectedly in December, sliding 0.4% on the month despite price cuts by retailers.
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Riva Froymovich contributed to this article.
