Dollar Gains Slightly After GNP Report Meets Expectations
NEW YORK -- An unsurprising report on U.S. gross national product left the dollar only slightly higher against most major currencies in light trading.</br></br>Several traders said some of the gain came on late selling of the yen, partly on rumors that major oil-exporting nations may have agreed to cut production. The rumors, which weren't confirmed, hit the yen first because Japan is almost totally dependent on imports for its oil.</br></br>"Overall, the (GNP numbers) didn't have that much impact on the currency markets," John Baker, chief trader at Bank Julius Baer & Co., said. The Commerce Department said the U.S. economy grew at a 2.3% annual rate in the first quarter, slower than the 4.8% rate in the fourth quarter of 1987 and exactly in line with many analysts' expectations. The price deflator, an important indicator of inflation, rose at a 2.4% annual rate, slightly lower than the fourth quarter's 2.7%.</br></br>Some traders said the figures were mildly bullish for the dollar because they indicated a slight narrowing of the U.S. trade deficit and a slowing of non-farm inventory accumulation. On the other hand, some economists said the figures depicted a slower narrowing of the trade deficit than they expected. They said the apparent strength of consumer and business demand will make it difficult to slow imports.</br></br>Initially, the market seemed to view the figures bearishly, as the dollar fell to intraday lows of 1.6697 marks and 124.30 yen shortly after their release.