Euro gains momentum, nears $0.88

Published December 3rd, 2000 - 02:00 GMT

The euro gathered steam Friday, December 1, as the dollar was hurt by nervousness about the pace of economic slowdown in the United States. 

 

The single European currency climbed to $0.8791 at 2200 GMT in New York, from $0.8724 a day earlier. 

 

But the greenback rose against the Japanese currency, to 111.17 yen from 110.33 yen in New York amid negative sentiment about the economy in Japan. 

"The US dollar has weakened against pretty much all currencies apart from the yen, which has suffered from a political crisis in Japan," Standard Chartered economist Rozia Khan said. 

 

"It's the first time that the euro has gained significantly on the US economic slowdown and not only on intervention fears," she said. 

 

Wells Fargo senior currency trader Simon Fowles said the euro had achieved safe haven status this week after exceptionally weak US data triggered speculation that the United States could be headed for a recession. 

 

The National Association of Purchasing Management said its overall index fell to 47.7 points in November from 48.3 in October as the manufacturing sector softened for the fourth consecutive month. 

 

The storm whipped up on Wall Street in recent weeks has done little to calm investor sentiment towards US assets, which have taken a pounding on the equity markets of late. 

 

"The underlying support for the euro has remained the weakness of the US economy and equity markets, and we expect this to continue," said Chase Manhattan economist Adrian Schmidt.  

 

Japan meanwhile reignited fears of deflation in the world's second-biggest economy with a gloomy set of figures Friday indicating weak prices. 

 

Economic Planning Agency chief Taichi Sakaiya attacked the Bank of Japan's decision in August to abandon its 18-month-old policy of guiding interest rates close to zero.  

"Longstanding deflationary concerns have become clearer this autumn," he said. 

 

In late New York trade, the dollar fetched 1.7226 Swiss francs from 1.7286 on Thursday. 

Sterling traded at 1.4373 dollars against 1.4255 the previous day.— (AFP)  

 

© Agence France Presse 2000  

© 2000 Mena Report (www.menareport.com)

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