MW: U.S. dollar heads to best weekly gain since October 2008
British pound falling after election points to hung parliament
NEW YORK (MarketWatch) -- The dollar headed to the best weekly gain since October 2008, though swung widely on Friday, as concerns about European sovereign debt lingered and investors resumed a shift into assets perceived as safer -- notably U.S. Treasury bonds -- and out of those considered riskier, including stocks.
The dollar was mostly higher against the yen and the British pound in reaction to the massive plunge on Wall Street Thursday and prospects for a hung parliament in the U.K. Trading in the euro was volatile after the shared currency sunk to a 14-month low on Thursday.
"The overriding fear is that there is going to be some continuation of yesterday's drop, though not as dramatic," said Steven Englander, global head of G-10 foreign exchange strategy at Citi. "Markets need a much more concrete political commitment, both with austerity measures in countries that need them" and from other members of the euro-zone and European institutions to support them.
The dollar index (DXY 84.55, -0.35, -0.41%) , a measure of the U.S. unit against a basket of six major currencies, traded at 84.553, a jump from 81.866 a week ago. In late North American trading Thursday, it traded at 84.778, reaching the loftiest levels since March 2009.
The euro (CUR_EURUSD 1.2709, +0.0079, +0.6255%) traded at $1.2727, after briefly being lower and compared to $1.2639 late Thursday, when the shared currency touched a 14-month low. Last Friday, it bought $1.330.
The dollar (CUR_USDYEN 91.6800, +0.8200, +0.9028%) bought 91.67 Japanese yen, compared with 90.44 yen late Thursday. Trading in the cross was volatile, with the dollar much higher earlier, as both currencies tend to benefit when investors shift out of positions and assets deemed as riskier.
The dollar has fallen from 94.01 yen last Friday, the biggest decline since late February.
Germany's parliament approved legislation Friday to contribute 22.4 billion euros to an international aid package aimed at staving off bankruptcy in debt-laden Greece. See more on Germany, Greece debt.
Still, U.S. stocks turned lower, with the Dow Jones Industrial Average (INDU 10,438, -81.84, -0.78%) losing 1.5%. See more on U.S. stocks.
The benchmark index dropped by the most ever on Thursday, in part due to technical trades. The plunge followed riots in Greece after lawmakers there approved measures aimed at quickly slashing the deficit.
U.S. Treasury prices jumped this week, pushing yields on the benchmark 10-year note down to (UST10Y 3.42, +0.03, +0.74%) near the lowest since December. Read about Treasury bonds.
Finance ministers from the Group of Seven were expected to hold a teleconference, and the Council of Europe were meeting Thursday, which helped put a floor under the European unit earlier in the session.
On Thursday, the euro extended losses and U.S. stocks briefly plunged 8%, recovering later but still ending down more than 3%. Fears continued to rise about European countries' ability to slash deficits after riots followed Greek lawmakers' approval of austerity measures. See Thursday's Currencies report.
U.S. data, U.K. election
Also aiding the greenback -- but unusually secondary for the day -- a report showed the U.S. economy added 290,000 jobs in April, more than forecast, even as the unemployment rate rose due to more people resuming active job searches.
About 224,000 of the new jobs came from private companies, the Labor Department said, relieving concerns that the bulk would be short-term hiring to conduct the U.S. Census. Read more on U.S. jobs.
The British pound was very volatile, sliding as low as $1.4473 after voters failed to give a clear mandate to any party after the general election.
The U.K. currency stayed down as the leader of the third party, the Liberal Democrats, said the Tories should have the right to attempt to form the next government. See more on U.K. election.
The pound (CUR_GBPUSD 1.4766, -0.0014, -0.0968%) fell to $1.4787, from $1.4866 in late North American trading on Thursday, when it lost more than 1% against the greenback.
