LONDON, 29 September 2006 — The dollar was little changed yesterday on news that the US economy grew more slowly than had been initially thought in the second quarter but nonetheless managed to edge up slightly against the euro. The single European currency in late-day deals was at 1.2691 dollars after 1.2699 late Wednesday in New York. The dollar was meanwhile trading at 117.89 yen against 117.46 on Wednesday.
The euro was changing hands at 1.2691 dollars against 1.2699 dollars on Wednesday, 149.63 yen (149.18), 0.6773 pounds (0.6722) and 1.5841 Swiss francs (1.5800). The dollar stood at 117.89 yen (117.46) and 1.2481 Swiss francs (1.2440). The pound was being traded at 1.8737 dollars (1.8889). On the London Bullion Market, gold prices rose to $603 per ounce from $593.75 late on Wednesday.
US stocks fell yesterday, as investors booked profits on gains tied to optimism about profit growth and after the Dow Jones Industrial average broke above its record closing high.
Profit taking also took a toll on US Treasuries, which had enjoyed their own rally on the view inflation would remain contained and that the Federal Reserve could cut rates, possibly in early 2007.
Meanwhile, oil hovered near seven-day highs just above $63 a barrel. Its rise sent gold above $600 an ounce for the first time in two weeks, as dealers awaited a signal from OPEC on whether it would cut output to offset growing US inventories.
The Dow briefly pulled above its previous record closing high of 11,722.97 set on Jan. 14, 2000 on a strong gain in shares of General Motors Corp., a Dow component, after its chief executive said he was open to an alliance with Renault-Nissan. The Dow was down 18.73 points, or 0.16 percent, at 11,670.11. The Standard & Poor’s 500 index was down 1.66 points, or 0.12 percent, at 1,334.95, while the NASDAQ composite was down 6.3 points, or 0.28 percent.
Asian stocks posted modest gains in line with Wall Street after better-than-expected headline US housing figures reassured investors nervous about the extent of the US economic slowdown, dealers said. They said, however, that the underlying data should not change the view that the US property market is falling quite sharply and it remains to be seen what impact this will ultimately have on consumer demand.
For the moment, Wall Street, just short of record levels, appears confident the US economy will slow in a measured fashion, avoiding any shocks and setting up the US Federal Reserve to start cutting interest rates going into 2007. On that basis, some are ready to call for further gains in US stocks, which would be the key lead for regional investors.
