Dollar Rises vs Euro; Factory Orders May Highlight U.S. Appeal
By Mari Murayama
Tokyo, July 3 (Bloomberg) -- The dollar rose, putting it on track for its biggest two-day gain against the euro in seven weeks, on expectations reports today and tomorrow will show factory orders are rising in the U.S. while falling in Germany.
The U.S. currency strengthened to 98.38 cents per euro from 98.65 in late New York trading yesterday, when it gained 0.5 percent. The dollar rose for a third day against the yen, to 120.02 from 119.85 after rallying as high as 120.21.
U.S. factory orders probably rose for a third month in May, climbing 0.5 percent, a Bloomberg News survey of economists shows. A report Monday showed manufacturing grew in June at the fastest pace in almost 2 1/2 years. In Germany, Europe's largest economy, a report tomorrow will probably show factory orders dropped 0.2 percent in May, a survey showed.
``We're seeing many strong reports for the U.S. and weak ones for Europe,'' said Minoru Shioiri, foreign exchange manager at Kokusai Securities Co. ``More signs of the difference between the two regions may convince us'' to buy dollars, he said.
The euro fell yesterday on concern the region's economic growth may not be strong enough to support the currency's rally to a 28-month high last week.
``The strength of the economic recovery is still subject to uncertainty,'' European Central Bank President Wim Duisenberg said yesterday. Growth in Europe will reach at least 2 percent later this year, he said. That compares with forecasts for U.S. growth of 2.3 percent in 2002 made by the International Monetary Fund.
Vivendi
Concern Paris-based Vivendi Universal SA will default on its debts also weakened the euro, analysts said. Vivendi shares tumbled to a 13-year low, partly because French newspaper Le Monde reported that France's stock market regulator in February blocked Vivendi from using an accounting device that would have allowed it to add 1.5 billion euros to 2001 earnings.
``The Vivendi story fueled concern European companies are using improper accounting, helping the euro to drop,'' said Kosuke Hanao, head of forex sales at the Royal Bank of Scotland.
The dollar has dropped 10.5 percent in the quarter ended in June against a basket of six major currencies as foreigners shunned U.S. assets on speculation other U.S. companies will follow Xerox Corp., the world's biggest copier maker, and WorldCom Inc. in saying they misstated costs and revenue to inflate earnings.
Least Resistance
The euro may still resume its rally in the weeks ahead because sinking stocks on New York exchanges and the threat of terrorism against U.S. targets may reduce demand for dollars, some analysts said.
U.S. stocks slumped yesterday, sending the Standard & Poor's 500 Index to a 4 1/2-year low, as forecasts for computer-chip makers worsened and accounting issues took a toll on more companies. The euro recouped some of its losses as U.S. stocks sank.
``The path of least resistance is to sell'' U.S. stocks, said Philip Orlando, who oversees $6 billion as chief investment officer at Value Line Asset Management. ``You've got an absence of good corporate earnings news.''
The yen fell for a third day after Japan sold it on Friday for a seventh occasion in about six weeks to stem the currency's 10.6 percent gain against the dollar in the past three months.
The European Central Bank and the Federal Reserve also sold the yen on behalf of Japan, dissuading some investors from trying to push up the currency, analysts said.
In other trading, the dollar rose to 1.4899 Swiss francs from 1.4864 francs and to $1.5311 per British pound from $1.5358 yesterday.
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The dollar has bottomed.
charts-d.quote.com:443/1025278788850?User=demo&Pswd=d...
The long road back will begin the counter-trend reversal move back to 111 from sub 107 for starters.
Japan and Europe are well behind the US in the economic recovery.
Best Regards, J.T. |
