LONDON, 31 August 2006 — The dollar dipped yesterday, as the US second quarter growth figure - although revised upward - was below expectations on Wall Street, while the euro soared to a new record against the yen. The yen remained weak as a further rise in Japanese interest rates this year appeared unlikely. The euro at one point hit a new record of 150.25 yen. The single European currency in late-day trade was at 1.2824 dollars against 1.2823 late Tuesday in New York. The dollar was trading at 117.08 yen after 116.59 on Tuesday.
US data released earlier in the day, which showed an upward revision to second quarter economic growth to 2.9 percent from an earlier reading of 2.5 percent, was broadly viewed as negative for the dollar, given that it was slightly below the consensus forecast for an upgrade to 3.0 percent.
The euro was changing hands at 1.2824 dollars against 1.2823 on Tuesday, 150.18 yen (149.52), 0.6736 pounds (0.6752) and 1.5767 Swiss francs (1.5758). The dollar stood at 117.08 yen (116.59) and 1.2292 Swiss francs (1.2287). The pound was being traded at 1.9041 dollars (1.8984). On the London Bullion Market, the price of an ounce of gold advanced to 617.75 dollars per ounce, from 613.40 dollars late on Tuesday.
The major US stock indexes were mixed, but showed scant momentum yesterday morning after the government revised its estimate for second quarter US economic growth a shade higher. At 1608 GMT, the Dow Jones Industrial Average was up 3.36 points (0.03 percent) at 11,373.30 while the NASDAQ composite was 7.10 points (0.33 percent) higher at 2,179.40. The broad-market Standard and Poor’s 500 index was down 1.25 points (0.10 percent) at 1,303.03.
Asian stocks closed mixed yesterday with underlying sentiment remaining strong after another positive finish on Wall Street and another easing in oil prices in regional trade. However, some caution entered the market ahead of revised estimates for US economic data due out later in the day resulting in mild profit taking.
Jakarta fell 0.54 percent after a weak financial performance by Indosat. Sydney and Wellington were flat but all other markets were stronger with Singapore, Kuala Lumpur, Bombay, Hong Kong and Taipei making solid gains on Wall Street’s better result and the lower cost of crude. A strong yuan supported gains in Shanghai. Dealers in Hong Kong did sound a note of caution after oil prices rebounded above $70 per barrel in early European trade on the eve of a UN deadline for Iran to suspend nuclear enrichment operations or face the threat of sanctions.
