Dollar Mostly Stronger, But Euro Holds Above $1.50

But on Friday, a sense of caution gripped markets after mixed results from major corporations this week. The Dow industrials were down about 85 points at 9,996 in early afternoon trading. That helped the dollar.

The dollar rose to 91.87 Japanese yen from 91.29 yen. The British pound tumbled to $1.6347 from $1.6624 after the government unexpectedly said the U.K. economy shrank 0.4 percent in the third quarter. Economists had mostly expected slight growth.

That means the British government is likely to leave interest rates at an extremely low 0.5 percent, said Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp. Meanwhile, he said he expects the Federal Reserve will raise rates from their current rock-bottom range near zero early next year. Most economists expect the Fed to start hiking rates later in the year, probably in midsummer or early fall.

Raising U.S. interest rates would make the dollar more appealing to traders, because it would cause the assets priced in dollars to have higher returns.

In other New York trading, the dollar rose to 1.0507 Canadian dollars from 1.0486 late Thursday, and gained to 1.0060 Swiss francs from 1.0048 francs.

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