Dollar mixed in first trading day of '08

Dollar mixed in first trading day of '08

	Published : Wed, 02 Jan 2008 22:06 By : Agencies Print this Story

NEW YORK (AP) - The dollar was mixed against other currencies Wednesday, the first trading day of the new year, as an index of U.S. manufacturing contracted last month after 10 straight months of growth, contributing to a tumble of more than 200 points in the Dow.

The U.S.-based Institute for Supply Management, a private research group, said its manufacturing index registered 47.7 last month, down nearly 3 percentage points from the 50.8 recorded in November. A reading above 50 indicates growth, while anything below that means contraction. That was weaker than the 50.9 expected by analysts polled by Thomson/IFR Markets.

The dollar fell against the euro in afternoon trading. The 15-nation euro, which expanded to include Malta and Cyprus on Jan. 1, bought $1.4726 late in New York, above the $1.4682 it bought on Dec. 31 in New York, and well off its all-time high of $1.4967 set on Nov. 23. Most markets were closed Jan. 1, a holiday in the U.S. and across the euro zone.

The dollar gained on the British pound. The pound fell to $1.9802 from $2.0029 on Monday, while the dollar slipped to 109.43 Japanese yen from 111.54 on Dec. 31.

The dollar has been buffeted by worries over the health of the U.S. economy and three interest rate cuts by the U.S. Federal Reserve, which is trying to reduce borrowing costs to revive the nation's battered housing market. Investors think another rate cut may be on the way.

The minutes of the Fed's Dec. 11 meeting, released Wednesday, called the country's economic outlook 'uncertain,' saying that a 'substantial further easing' of interest rates may be needed if U.S. economic problems worsen.

Lower interest rates can jump-start a country's economy, but may weigh on the currency as traders look to invest in higher-yielding assets.

'There's certainly a consensus that the U.S. economy will be in for a rough ride through the early part of 2008, but whether we'll see a recession remains to be seen,' said James Hughes, of CMC Markets in London.

Similarly, the rise of the euro has led to consternation by some politicians, notably in France, where President Nicolas Sarkozy has said it makes it harder for European exporters like plane builder Airbus to be competitive.

In other New York trading, the dollar fell to 1.1178 Swiss francs from 1.1276 Swiss francs Monday, while the dollar rose to 99.07 Canadian cents from 98.54 Canadian cents on Dec. 31.