Newspaper article THE JOURNAL RECORD

Dollar Falls amid Speculation of Cut by Fed in Discount Rate

Newspaper article THE JOURNAL RECORD

Dollar Falls amid Speculation of Cut by Fed in Discount Rate

Article excerpt

NEW YORK (AP) - The dollar, which rose briefly in Europe, fell against most major currencies in the United States on Wednesday, undermined again by continued speculation that the Federal Reserve Board soon would cut its discount rate.

Trading was dull ahead of the Fourth of July holiday.

Gold fell slightly. Bullion was quoted at $343.50 an ounce at 4 p.m. EDT at Republic National Bank in New York, down 50 cents from Tuesday's late bid.

""The dollar is looking weaker, as sentiment appears to be more firmly entrenched that we have a discount rate cut coming our way,'' said Robert Brusca, chief economist at Nikko Securities Co. International Inc. in New York.

Brusca added, ""Most people are expecting the U.S. discount rate cut to come as a package with the major foreign central banks.''

The discount rate is what the Fed charges member banks for loans. If central banks do cut such rates simultaneously, the move would eliminate an interest rate spread, which would give some currencies an advantage over others.

Lower U.S. interest rates make dollar denominated investments less attractive.

Adding to the speculation that a rate cut is coming was a report from the Commerce Department that U.S. factory orders dipped 0.1 percent to $193 billion in May. That was the third decline in the last four months.

""It helped it (the speculation) along,'' Brusca said. ""It was weaker than expected. Like any report, there are bright spots and there are weak spots. Even the bright spots in this report were relatively gloomy.''

The latest report comes on top of other evidence that the economy hasn't rebounded, as expected. The government already has reported declines in consumer spending, home sales, employment and industrial production during May. …

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