$ strength on its present level and a strong economy-- good news for the market..in my own opinion by electing democrats and cutting house majority of Republicans US voters send a clear signal that they prefer economic growth over 'senseless' inquisition..
On a seperate note according to Bloomberg the dollar posted its biggest gain in two weeks against the yen and reached a one-month high
against the deutsche mark on expectations the U.S. economy will
remain strong, delaying interest-rate cuts.
''The U.S. economy is surprisingly resilient,'' said Lukas
Daalder, a senior market economist at Rabobank, who's advising
buying dollars. ''Unless the figures turn sour -- and we don't
think they will -- we don't expect a rate cut in November.''
The dollar rose to 116.85 yen from 115.41 in London.
Earlier today, it climbed 1.4 percent to 117.04 yen, marking its
biggest gain since Oct. 20. The dollar rose for a second day
against the mark to 1.6671 marks, its highest level since Oct.
1, from 1.6598.
The U.S. said last week that the economy grew at a faster-
than-expected 3.3 percent annual rate in the third quarter,
dimming expectations the Federal Reserve will cut interest rates
when it next meets Nov. 17.
There's ''relief that the U.S. economy hasn't imploded and
(Fed Chairman Alan Greenspan) has safeguarded the economy and
the bull market,'' said Paul Meggyesi, the senior currency
strategist at Deutsche Bank in London.
Traders and investors will get more clues on the economy
today, when the Fed releases its periodic report on regional
economic conditions, known as the beige book.
A U.S. employment report, to be released Friday, will
probably show that the U.S. added 180,000 jobs in October, up
from 69,000 in September, according to economists polled by
Bloomberg News.
Reports showing U.S. economic strength may help delay a
third cut in interest rates, maintaining the value of returns on
dollar deposits. The Fed has cut the fed funds rate for
overnight loans between banks twice since Sept. 29, to 5.0
percent. Japan's overnight loan rate between banks is 0.25
percent.
In U.S. congressional elections, the Democrats won as many
as seven seats in the House of Representatives, cutting the
Republicans' majority of 22 seats by about half. That could
speed the end of an impeachment investigation against President
Bill Clinton, a Democrat, analysts said.
''The impressive showing of the Democrats could be
interpreted as a further sign that U.S. consumers still feel
confident about the economy,'' said Gerard Lyons, chief
economist at DKB International. ''The election result should
remove fears about impeachment and thus could give the dollar
some near-term strength.''
Still, signs of economic strength don't rule out further
rate cuts altogether. The expectation that rates will fall
faster in the U.S. than in Germany could restrain the dollar's
advance against the mark. Germany has held its benchmark
securities repurchase rate at 3.30 percent since October 1997.
''We're cautious on the dollar because we feel there's a
greater tendency towards further rate reduction in the U.S. than
there is in Germany,'' said John Monckton, who helps manage 10
billion pounds ($16.6 billion) in assets at Legal and General
Investment Management. ''We're backing the mark.'' Monckton said
he sees U.S. rates falling another 50 basis points in the next
six months.
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