MW: Dollar slips on light profit-taking as yen gains
Euro mixed as single-currency region returns to growth in third quarter
By Deborah Levine & William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- The dollar mostly lost ground Friday, with strategists attributing the modest weakness to market participants taking profits on the greenback's recent bounce.
Technical considerations appeared to be the biggest factor in Friday's currency dealings, even with data reported from opposite sides of the Atlantic showing the European economy returning to growth as well as a wider-than-predicted U.S. trade deficit for September, analysts said.
The dollar index (DXY 75.55, -0.05, -0.06%) , a measure of the U.S. unit against a trade-weighted basket of rival currencies, fell to 75.551 compared to 75.648 in late New York trading on Thursday.
The greenback briefly extended losses after data showed that the U.S. trade imbalance widened more than forecast, to $36.5 billion in September, and that import prices rose 0.7% last month. Read the details on the wider U.S. trade gap.
"While trade is not a prime driver of currencies, the combination of rising imbalances and extremely low rates is typically a U.S. dollar negative," said strategists at Barclays Capital.
Meanwhile, the euro retreated against the Japanese yen and the British pound as euro-zone data showed the 16-nation region that shares the single currency returned to growth in the third quarter, but at a slower pace than expected. Read about euro-zone third-quarter GDP.
All in all, the resumption in growth resulted in "little drama" for the euro, which made no big moves in reaction to the series of national and regional GDP data released Friday, said Daragh Maher, currency strategist at Calyon.
The euro fetched $1.4843, giving up an earlier gain to stand virtually unchanged from $1.4841 late Thursday. The single currency fell by 0.8% and 0.4% against the yen and the pound, respectively.
The dollar bought 89.74 yen, down from 90.35 yen on Thursday.
A modest return to risk appetite was seen triggering some weakness in the dollar, said strategists at Brown Brothers Harriman. U.S. stock markets opened to small gains, while European equities traded mixed in the final session of the week. Read about Europe Markets.
"While benchmarks for other asset classes (stocks, commodities, etc.) have all pushed to record highs, the more risk-attuned yen crosses have actually been developing long-term, broad congestion patterns," said DailyFX Strategist John Kicklighter.
On Thursday, the dollar rose against major counterparts amid calls for strengthening the U.S. currency by leaders gathered in Singapore at a meeting of finance ministers from the Asia-Pacific Economic Cooperation group.
Also providing grist for currency traders, Treasury Secretary Timothy Geithner said the U.S. government's borrowing needs would be substantially less than expected. See Thursday's Currencies report.
President Barack Obama will attend the Singapore summit on his first state visit to Asia. Obama began his eight-day trip in Tokyo with other stops scheduled for Beijing, Shanghai and Seoul. Read more on Obama's Asian trip.
On Obama's agenda for Friday was a meeting with Japanese Prime Minister Yukio Hatoyama, but currency issues were not expected to come up for discussion.
