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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: kendall harmon who wrote (95719)	5/3/2000 5:47:00 AM
From: puborectalis	Respond to of 120523

Euro drops below $0.90 Currency hit by signs of US economic strength, expected Fed rate move May 03, 2000: 5:04 a.m. ET LONDON (CNNfn) - The euro drifted to a record low against the U.S. dollar on Wednesday, falling below 90 cents, as traders speculated that upcoming reports would underscore the faster rate of growth in U.S. economy compared with the euro zone. The 16-month-old European currency traded at $0.8987 Wednesday morning in European trading, after sinking as low as $0.8975. The euro has weakened by down more than 23 percent against the dollar since its launch in January 1999. Economists pointed to imminent U.S. economic data, notably a key housing report Wednesday, that are expected to show inflation pressures still lurk there and might prompt the Federal Reserve to hike interest rates further to cool off the economy. Most observers expect the Fed to raise its key rate a half-percentage point at its next meeting. "The U.S. economy is showing no signs of losing steam," said Tony Norfield, head of global currency trading at ABN Amro. "A 50-basis point rate hike by the Fed would make the 25-basis-point increase from the [European Central Bank] look fairly puny," he said. A percentage point equals 100 basis points. Expectations of higher interest rates in the U.S. could attract investors to shift money into dollar-denominated deposits, out of other currencies including the euro. Norfield also said some big-ticket corporate investments, such as Dutch insurer ING's $6 billion friendly merger with ReliaStar, could have added to pressure on the European single currency, as European companies buy dollars and sell euros to carry out their transactions. "It highlights that a great deal of investment is flowing out of the euro area and into the U.S., the U.K. and elsewhere," he said. Currency market trading was light, with traders in Japan on a three-day holiday for "Golden Week" celebrations there.