After an initial positive reaction to news that President Clinton and the U.S. Congress reached a compromise to partly reopen government offices, the
dollar fell Monday as uncertainties remain on the ultimate budget deal, traders said.
The big story for the dollar is still the budget, they said, which leaves trading in limbo until the de- tails and final plan are forged."They (budget negotiators) haven't even gotten down to brass tacks," said George Stein, senior dealer with LFG Global Services in Chicago.
Mr. Stein also indicated traders are likely to leave the market alone at this juncture.
Any enthusiasm over U.S. legislation to temporarily fund the government quickly wore thin.
There was disappointment the dollar saw no follow-through to progress on the budget. However, many market participants are also waiting for a trend to develop after tiring of the churning range activity that has plagued the market recently.
Hedge funds dominated trading Monday, with corporate traders on the sidelines.
Talk that a troubled Japanese bank may need to repatriate external
investments to shore up its accounts weighed on the dollar against the yen.
The market continued to watch the British pound, after its plunge Friday to a fresh historic low of 2.1675 Deutsche marks.
The pound recovered from its all-time low, but remains on shaky ground. The U.K. economic data released Monday confirmed growth is slowing, spurring renewed speculations that an interest rate cut is likely before the end of the year. Further market unease followed reports that Prime Minister John Major is taking a tougher stance against European monetary union.
The Bank of Greece Monday spent some 300 million Deutsche marks ($215 million) repelling a speculative attack on the drachma following Greek Prime Minister Andreas Papandreou's hospitalization in a cardiology hospital, bank officials said.
Bank officials said they feared more attacks on the drachma if Mr. Papandreou's condition worsened. He underwent heart surgery in 1988.
Suffering with pneumonia, Mr. Papandreou remained conscious and talking in an intensive care unit at the Onassis Heart Hospital in Athens, a government spokesman said.