The dollar plummeted to its lowest level in almost a year yesterday in a selling wave sparked by an 0.8 percent drop in retail sales. Gold and silver rose.
Dealers said the market began to bid the dollar higher when a dealer wire erroneously reported retail sales as rising instead of dropping.
"Most had expected a slight increase and were ready to buy dollars," one said. "When the correct figures came out everyone began to dump dollars and it just fed on itself."
The dollar was trading at 2.869 German marks by late afternoon, its lowest since August, 1984. The losses were equally large against other currencies.
"We broke through two major chart support levels, 2.90 marks then 2.88 marks," another dealer said. "It would appear that 2.85 is the next stop, and if next weeks government statistics come in weak we could be looking at 2.80."
In London, the pound rose to $1.3887 from Thursday's $1.3835, and in New York it jumped to $1.3906 from $1.3751. In Tokyo overnight, the dollar fell to 242.80 Japanese yen from 242.95, and in New York it plunged to 240.33 from 242.90. Dealers said 240 yen is a key support for Japanese traders, and if the dollar drops below that price, it could fall quickly to still lower levels.