LONDON: The dollar slipped back yesterday on profit-taking after recent gains while the euro found only modest support as the market anticipated more weakness in the European economy.
Dealers said trade was relatively quiet, with the exchanges between Washington and Moscow over the conflict in Georgia appearing to have no impact on sentiment.
In late London trade, the European single currency was at 1.4741 dollars, up from 1.4685 dollars in New York late on Friday. Against the Japanese currency, the dollar fell to 110.12 yen from 110.48.
“It is a quiet start to the week for the markets in terms of economic data and indeed for the week as a whole things could be relatively patchy which should mean little prospect of a re-think in terms of the interest rate outlook in developed markets,” said Calyon analyst Daragh Maher. The dollar last week jumped to a six-month high against the euro and its strongest level since January against the yen on worries that the fallout from the US financial crisis was spreading to other major economies. Markets were looking ahead to the results of the ZEW survey of German business confidence due today amid growing concerns about the health of the euro zone economies.
Elsewhere yesterday, the British pound remained pressured by prospects of cuts to British interest rates from their current level of 5.0 percent after further weakness in the housing market. Sterling hit a two-year low against the dollar on Friday. In London trade yesterday, the euro changed hands at 1.4741 dollars against 1.4685 dollars late on Friday, at 162.17 yen (162.27), 0.7890 pounds (0.7871) and 1.6149 Swiss francs (1.6099). The dollar stood at 110.12 yen (110.48) and 1.0964 Swiss francs (1.0961).
On the London Bullion Market, the price of gold was unchanged at $786.50 per ounce.
Meanwhile, European stock markets closed narrowly mixed yesterday.
On Wall Street, before 1 p.m., the Dow Jones Industrial Average was down 148.51 points, or 1.27 percent, at 11,511.39. The Standard & Poor’s 500 Index was down 14.66 points, or 1.13 percent, at 1,283.54. The Nasdaq Composite Index was down 32.05 points, or 1.31 percent, at 2,420.47.