Corporations' Orders to Buy Push Up Dollar --- An Early Slump Followed Yeutter Trade Remark; No Fed Action Is Seen
The dollar firmed yesterday, bouncing back from an overnight drop that occurred after U.S. trade envoy Clayton Yeutter gave a somewhat bearish outlook for the U.S. trade deficit.</br></br>Traders said one or more large corporate buy orders contributed to the dollar's recovery from its intraday lows. The corporate orders reportedly prompted many dealers to buy more dollars to cover short, or oversold, positions in the U.S. currency.</br></br>The sudden rise in the dollar's value during New York trading stirred rumors that the Federal Reserve had intervened on behalf of the U.S. currency. But traders at many commercial banks with which the Fed regularly deals said they saw no intervention by the central bank yesterday.</br></br>"The activity we saw was purely the result of speculative and corporate activity," Ian M. Spence, chief dealer at Manufacturers Hanover Trust Co., New York, said.</br></br>Traders said the dollar's big lift of the day came when one or more large corporate orders to buy as much as $300 million were worked into the market by a couple of big New York banks. "The dollar just shot up," said Mary Anne T. Tompkins, the senior West German mark trader at Royal Bank of Canada's New York office.