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To: yard_man who wrote (162671)	4/28/2002 11:55:31 AM
From: Haim R. Branisteanu	Respond to of 436258

04/27 11:41 - Euro May Extend Rally as U.S. Rebound Slows: Currency Outlook By Mark Tannenbaum New York, April 27 (Bloomberg) -- The euro may gain for a fifth week against the dollar as investors pare back their expectations for U.S. economic growth. Economists forecast declines in consumer confidence and a manufacturing index, and an increase in the jobless rate to 5.8 percent in April. The reports would be the latest evidence to show the economy's recovery will slow, crimping demand for the dollar, after surging 5.8 percent in the first quarter. ``People are deciding they need to diversify a bit and there is some movement out of the dollar'' and into currencies such as the euro, said Robert Millns, head of foreign exchange at HVB Americas, a unit of Germany's second-biggest bank. The euro rose 1 percent this week to 90.20 U.S. cents, a fraction off its high this year of 90.64 cents reached in January. A rally beyond that level would mark the first time in the euro's history that it reached a yearly high in a month other than January. In the euro's first three years, it sank against the dollar after peaking in January. Some say the euro may have little more room to rally. Even Millns said that while he expects the euro to rise next week, he doubts it will keep gaining. ``You're up into pretty lofty levels here,'' Millns said. Millns said that after the euro surpass its January high, he's watching a level of about 91.20 cents, a so-called technical level he has charted from studying the euro's trading patterns. Above that level he'll be more confident the currency will keep rallying. O'Neill Investors may also sell the dollar for the euro and yen ahead of a Senate hearing Wednesday at which Treasury Secretary Paul O'Neill will report on whether a strong dollar is cutting into U.S. exports and fueling job losses. Analysts say other members of the Bush administration may not back O'Neill's strong dollar policy as pressure from labor and manufacturing groups picks up to weaken the currency and make U.S. products cheaper. Even after the euro's recent rally, the dollar is still up 23 percent against the European currency since it debut level of about $1.17. Traders may conclude that they ``don't want to be long dollars going into that meeting,'' said Sean Callow, a currency analyst at IDEAglobal.com. ``You could get the impression (O'Neill's) view on the dollar is increasingly lonely'' in the administration. Jerry Jasinowski, president of the National Association of Manufacturers, and other business and labor leaders will also speak at the hearing. Speculators O'Neill told French newspaper Les Echos earlier this month that he favors a strong dollar and that the value of a country's currency reflects the state of its economy. A Treasury spokeswoman confirmed the content of the paper's interview. The euro may be vulnerable because speculators have amassed a record amount of futures bets that the currency will strengthen, said analysts. That may dim the currency's chances of rising because fewer traders are left to make purchases. Data from the Commodities Futures Trading Commission shows speculators hold 29,623 more long euro futures contracts than short contracts, which would gain in value as the euro falls. The growing numbers of bets on the euro comes as reports this week showed business confidence in Germany, Europe's biggest economy, unexpectedly fell in April. The reports prompted some analysts to say the euro's rally may stall. ``The pendulum has maybe swung too far'' in favor of expectations U.S. growth will fade relative to Europe and the dollar will fall, said David Solin, a partner at Foreign Exchange Analytics in Essex, Connecticut.