The dollar was lifted in cautious trading Friday after pessimism about the economy was tempered by a government report that was better than expected.
Gold was slightly higher.Traders said the dollar staged a small early rally when the Commerce Department reported the economy declined at an annual rate of 2.1 percent in the final three months of 1990.
The government said the gross national product - the country's total output of goods and services - dropped at the sharpest rate since a 3.2 percent decline in the third quarter of 1982. Many economists took the report as verification that the nation has entered a full-blown recession.
But currency analysts said the number was better than the 3 percent to 4 percent decline that the market had been expecting.
"It was a startling bit of news," said Robert Ryan, corporate foreign exchange manager for the Bank of New York. "It dampened the pessimism that was out there."
The dollar moved narrowly through trading, a reflection of reluctance among dealers to take major positions without knowing what might transpire over the weekend in the Persian Gulf.
"People are playing close to their chest. If they are running positions over the weekend, they are running much smaller than they usually are," said Bob Morrissey, senior trader at the Bank of Boston. "A lot of people are going home square."
The dollar rose marginally in New York against the Japanese yen, to 132.55 yen from late Thursday's 132.35 yen. In Tokyo, the dollar rose 0.73 yen to a closing 132.38 yen. Later in London, it was quoted at 132.25 yen.
The dollar also rose slightly against the British pound in New York, where sterling fetched $1.9564 compared to $1.9565 late Thursday. In London, the pound fell to $1.9580 from late Thursday's $1.9600.
Other late dollar rates in New York, compared with late Thursday, included: 1.4910 German marks, up from 1.4868; 1.2628 Swiss francs, up from 1.2575; 5.0685 French francs, up from 5.0550.
Gold rose in New York by $2.70 a troy ounce to $375.70 on the Commodity Exchange. Republic National Bank later quoted a bid for gold of $375.50 a troy ounce, up $2.75 from late Thursday.