NEW YORK -- The dollar held to a narrow range and was little changed against both euro and yen, as market participants took only minimal positions ahead of U.S. jobs data today and the weekend's meeting of the finance ministers of the Group of Seven industrialized nations.
Official confirmation that yen will be discussed at a meeting of G-7 finance ministers tomorrow in Washington didn't move the dollar/yen pair much, as traders speculated that the G-7 won't hand down any new initiatives on the Japanese currency.
Mixed economic data gave traders little to go on and they remained firmly on the sidelines for most of the New York day, resulting in very quiet trading.
According to several analysts, traders have reduced their willingness to take positions in the aftermath of the Sept. 11 attacks, fearing that possible U.S. retaliation, Middle East escalation or further terrorist activity could lead to erratic market movements.
But some analysts now feel that these fears are starting to recede and "while liquidity in foreign-exchange markets is very low, we are more or less back to normality," said Jan Amrit Poser, currency adviser at Sarasin Investment Bank in Zurich.
In late trading, the euro was at 91.76 U.S. cents, up from 91.45 cents earlier in London, and above 91.31 cents late Wednesday in New York. The dollar was at 120.51 yen, rebounding from the intraday low of 120.22 yen but close to late Wednesday's 120.68-yen level.
The dollar was also at 1.6187 Swiss francs, below 1.6244 francs late Wednesday in New York. Sterling was at $1.4768, little changed from late Wednesday's $1.4760.
Traders also noted that the dollar had been underpinned since Wednesday's U.S. National Association of Purchasing Management nonmanufacturing index, which rose to 50.2 in September from 45.5 in August. A figure above 50 indicates expansion in the economy.
However, yesterday's initial jobless claims report has now wiped out much of the positive NAPM residual effects, traders said. Jobless claims rose by 71,000 to 528,000, the highest level since July 25, 1992. It was more than double the 30,000 increase that analysts had been expecting.
"This was an awful number and has moved the dollar back to [Wednesday's] levels," said Tim Mazanec, senior foreign-exchange strategist at Investors Bank & Trust in Boston.
In another report, orders to U.S. factories were unchanged in August, giving some indication that the struggling manufacturing sector of the economy is starting to show improvement. The August factory orders report was better than analysts' expectations, most of whom were forecasting a 0.5% drop. Barring any unforeseeable shocks that come up soon, analysts suggest that the dollar is likely to slip against the euro and push higher against the yen in coming weeks.
Based on his expectations for a "slowing U.S. economy and [continuing] negative interest-rate differentials" between the U.S. and the euro zone, Mr. Poser at Sarasin Investment Bank sees the common currency gaining across the board and suggests that "the euro should be at 95 cents at year end." The pound was steady against the dollar after the Bank of England cut its key interest rate by a quarter percentage point to 4.50%.
While the pound is now expected to lose ground, its losses should be limited. "The U.K. will still look good compared to other major economies," said Klaus Baader, currency economist with Lehman Brothers. "There's not too much downside."
Chile's peso broke the psychological barrier of 700 pesos to the dollar, ending the session at a historic low of 703.15 compared with Wednesday's close and the previous record of 699.45 pesos to the dollar.
Traders said continued concern about Argentina's ability to pull out of years of recession, combined with the general atmosphere of global uncertainty, mounted pressure on the Chilean currency. Copyright (c) 2001 , Dow Jones & Company Inc