Traders Believe Dollar Is Poised To Move Higher
Foreign-exchange traders, who have been divided the past couple of weeks about whether the U.S. dollar would weaken or strengthen, now appear convinced that the currency is once again headed upward.</br></br>Their view was reinforced yesterday when, despite the absence of the U.S. and Canada from the currency market for the Labor Day holiday, the dollar soared in European trading to 2.9120 West German marks, the highest level since Aug. 7, when the dollar hit an 11-year high of 2.9255 marks in New York.</br></br>"This new pattern of strength will be carried over into the U.S. when trading resumes (today)," said Ronald H. Holzer, an assistant vice president and chief dealer of Harris Trust & Savings Bank, Chicago. Mr. Holzer said the dollar took off yesterday after rising through a technical resistance point at 2.8940 marks. Stronger Eurodollar interest rates and expectations of rising U.S. interest rates, which make dollar-denominated investments more attractive, were responsible for the general dollar strength, he added.</br></br>At the London afternoon gold fixing yesterday, gold declined to $344.50 an ounce from the morning fixing of $346.20 and from the Friday close of $348.40 on the Commodity Exchange in New York. Traders said the dollar's strength in Europe was responsible.</br></br>In early trading in Hong Kong Tuesday, gold was quoted at $344.25 an ounce.