Dollar trades mixed on disappointing earnings, economic news from overseas

Friday, July 24, 2009

Dollar mixed on disappointing earnings

NEW YORK — The dollar rose against the pound but slipped versus the euro Friday after Microsoft Corp. and Inc. posted disappointing profit reports, while a closely watched survey suggested the European economy may be stabilizing after a steep drop earlier in the year.

The 16-nation euro inched up to $1.4216 from $1.4203 it bought late Thursday after financial information services company Markit said the euro zone saw activity in services and manufacturing contract far less than expected in July.

The increase does not mean that the sector is growing yet, just that the recession may be easing — any reading below 50 indicates a contraction but the smaller the difference from 50 the less the contraction.

Meanwhile, the British pound fell to $1.6432 from $1.6520 after official figures showed the British economy contracted by twice as much as economists had forecast in the second quarter.

Stronger-than-expected U.S. corporate earnings this week have added to the case for an economic turnaround, but disappointing results from Microsoft and Amazon Friday underscored that revenue at some companies is still sagging as consumers refrain from spending to shore up their savings.

Still, investors have taken the improved results as confirmation that the economy is healing and that a turnaround is possible by the end of the year.

Improvements in equity markets can drive investors from the safety of the dollar as they seek riskier bets elsewhere.

In other late trading Friday, the dollar fell to 94.73 Japanese yen from 95.13 yen Thursday. The dollar fell to 1.0701 Swiss francs from 1.0719 francs, and slipped to 1.0839 Canadian dollars from 1.0857.

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