Euro nears $0.86 threshold

Published November 29th, 2000 - 02:00 GMT

The euro emerged even stronger here Tuesday, November 28, against the dollar which saw trading hampered by signs of a slowing US economy and persistent indecision over the US presidential race. 

 

The euro soared to $0.8580—its highest level since November 13—before settling at $0.8560 at 2200 GMT from $0.8515 late Monday. 

The dollar was buying at 110.15 yen, down from 110.71 yen a day earlier. 

 

The US economy faces a risk of increased inflationary pressure despite a narrowing in supply and demand imbalances, according to the president of the Chicago Federal Reserve Bank. 

 

The Open Market Committee had noted earlier in November that US economic momentum had begun to slow to a more sustainable pace, but it cautioned that inflation remained a potential near-term threat to growth. 

 

"The market suspects GDP data will be weak and also believes the ECB could come in after the data to make the most of the situation; the ECB has been known to kick the dollar when it's down," said Steve Barrow, a currency strategist with Bear Stearns. 

 

But analyst David Ethridge of MMS International brushed aside speculation over potential moves by the European Central Bank. "Nobody really knows what the ECB thinks," he said. 

 

"If the dollar loses a bit, it's more a sign of growth slowing at the lower level for some time, rather than growth below the forecast level for one quarter," he added. 

 

The dollar crumpled Tuesday on the announcement of a larger-than-anticipated drop of 5.5 percent in orders for US durable goods in October, following a 2.4 percent gain in September -- a sign that the US economy is slowing. 

 

Christopher Wiegand, an economist with Salomon Smith Barney, said "the slowing in orders reflects uncertainty about the near-term growth outlook, battered equity prices of new-economy companies and the difficulty of financing capital expansion through either the bond market or bank loans." 

 

Among major currencies, the euro traded late Tuesday at 94.29 yen from 94.27 Monday, 0.6038 pounds sterling from 0.6010 and 1.5076 Swiss francs from 1.5128. 

 

The dollar bought 1.7634 Swiss francs from 1.7769, while the pound sterling traded at 1.4169 dollars from 1.4167.— (AFP)  

 

© Agence France Presse 2000  

© 2000 Mena Report (www.menareport.com)

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