NEW YORK (AP) -- The dollar was mixed Tuesday as U.S. trade data underscored improvements in the global economy, while disappointing quarterly results from Alcoa Inc. and uncertainty over Chinese central bank policies worried traders.
Since the collapse of Lehman Brothers in late 2008, the low-yielding dollar has tended to rise in value when investors seek a safe haven due to bad economic or corporate news. The dollar often drops when investors' confidence improves, while riskier stocks, commodities and emerging-market currencies gain.
In late New York trading, the 16-nation euro slipped to $1.4497 from $1.4519 late Monday. The British pound climbed to $1.6179 from $1.6099, and the dollar tumbled to 90.99 Japanese yen from 92.07 yen.
Against a basket of six currencies, the dollar was down 0.02 percent.
On Monday, aluminum producer Alcoa kicked off the earnings season with quarterly results that fell short of market expectations. Still, UBS analyst Geoffrey Yu said strong corporate earnings were expected overall for the last three months of 2009. That could troublesome for the low-yielding dollar, he said.
Meanwhile, the Chinese government tightened its monetary policy for the second time this week amid concern over inflation and asset bubbles in the rapidly-rebounding economy. Brown Brothers Harriman analysts said officials indicated more hikes might be coming. A slowdown in China's growth as a result of future rate hikes could slow down recovering trade and economic growth throughout the world.
In the U.S., the government reported that the trade deficit in November widened 9.7 percent to $36.4 billion as imports rose 2.6 percent. Exports also grew 0.9 percent, thanks in part to a weaker dollar.
In order for the Federal Reserve to raise interest rates from their current rock-bottom range near zero, analysts say the economy must show signs of recovery.
Low rates tend to weigh on a currency because they mean smaller returns on assets denominated in that currency. High rates, or the expectation of increasing rates, can bolster a currency.
The U.S. Federal Reserve has said that continuing high unemployment and slack in the economy, alongside subdued inflation, would allow it to leave interest rates low for a long time.
In other New York trading, the dollar edged up to 1.0381 Canadian dollars from 1.0331 late Monday, and rose to 1.0179 Swiss francs from 1.0158 francs.
Source : finance.yahoo.com/
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