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Dollar falls due to less demand

NEW YORK: The dollar drifted lower Thursday as currency traders kept to the sidelines ahead of the release on Friday of a long-awaited government report on the job market in March.

Suspense has been building since the previous employment report showed the creation of 705,000 jobs outside of farms in February. Financial markets were shaken by that strong gain because it indicated the economy is picking up steam, which could fuel higher inflation.

Economists polled by Reuters on average expect that 60,000 jobs were created in March.

Traders, however, will be keen to see whether the number of jobs created in February will be revised or left unchanged. Some analysts have doubted the job market is as solid as the previous employment report indicated.

Given the fact that this is a big number in an abbreviated trading session, only those that have to be involved will be, said David Ethridge, director of foreign exchange analysis at MMS International in New York.

The foreign exchange market was also quiet because of the Passover holiday. The bond market will close at midday on Good Friday, while the stock market will be closed all day. Most European financial markets will be closed on Friday and Monday.

The dollar fell to 1.4788 German marks in late trade from 1.4826 on Wednesday. It stood at 107.03 Japanese yen, barely changed from 107.02 yen.

The dollar slid to 1.1921 Swiss francs from 1.1965. The British pound rose to $1.5300 from $1.5239. The dollar stood at Canadian $1.3577, little changed from C$1.3575.

While the dollar registered modest changes against most major currencies on Thursday, the mark loss ground against the Dutch guilder. Traders were surprised because the exchange rate between the two currencies is typically very stable.

The mark fell to 1.1166 guilders in late trade on Thursday from around 1.1182 earlier in the New York session. Some traders noted that the mark had moved in a range between 1.1180 to 1.1230 guilders for more than a year.

Some traders attributed the trend to investors moving out of German securities into other European securities including guilder-denominated debt.

"...A lot of people in the past year overweighted their European bond portfolios in marks because it looked like Germany was the only major economy that was going to meet the strict Maastricht criteria," said Bruce English, a vice president of institutional foreign exchange sales at ABN AMRO Bank.

The Maastricht criteria sets the standards for inclusion in the single European currency planned for 1999. For example, nations must have an annual budget deficit no more than 3 percent of gross domestic product.

English, however, noted that now it appears Germany will not meet the Maastricht criteria but German politicians may try to go ahead with the single currency anyway. A failure to meet the criteria has disappointed some investors.

Therefore, he said, some large fixed-income investors in Europe and the United States have recently been switching out of mark securities into guilder securities.-Reuter