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To: Rarebird who wrote (75467)	8/23/2001 2:59:00 AM
From: Gord Bolton	Respond to of 116758

Euro poised to rally as dollar weakens Dow Jones August 23 2001 at 07:13AM London - The US Federal Reserve's quarter point rate cut on Tuesday has not eased downward pressure on the dollar. In the aftermath of downbeat assessment of the US economy, the euro is now perfectly poised to rally against the dollar, which remains weak across the board. "There's more concern over the US economy," said Neil MacKinnon, the senior currency strategist at Merrill Lynch. Alan Greenspan, the chairman of the Fed, shares that concern. In his statement accompanying the trimming of the federal funds rate to 3,5 percent, Greenspan said "the risks are weighted mainly towards conditions that may generate economic weakness in the foreseeable future". Even with the cost of borrowing at its lowest level for seven and a half years, the US economy is still not showing sufficient signs of turning around. This spells further bad news for equities and the dollar, and a further Fed easing on October 2 is likely. Although the dollar rallied after the rate cut, it was back at intraday lows within an hour. This confirms the euro's resilience, with the pullback on the unit's recent rally not nearly as sharp as expected. With the European Central Bank more likely to ease rates next week, the euro could be entering a new trading range. "Profit-taking this week has been very, very limited," MacKinnon said. "This increases the [euro's] potential for a break into fresh new ground." But not everyone is as bearish on the dollar's prospects. "While the dollar has undoubtedly suffered as a consequence of diminishing investor confidence in the US recovery, evidence of a rebound, especially if the euro zone lags, risks producing a pullback in the euro/dollar below $0,90," said Steven Saywell, the senior currency strategist at Citibank. AFP reports the euro rallied to its highest level in five months yesterday, pushing to $0,9239 before dropping down to $0,9160 from $0,9182 on Tuesday. The dollar bought '120,40 versus '119,56 earlier. businessreport.co.za