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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (1008)	10/28/2002 1:41:14 PM
From: Don Green	Respond to of 48723

dg> Les thanks for the link.... Dollar Receives a Boost From Rate Speculation DOW JONES NEWSWIRES NEW YORK -- The dollar was higher against its rivals Monday, on speculation the U.S. Federal Reserve may cut interest rates.1 In early trading, the euro was at 97.45 U.S. cents, down from 97.67 cents late Friday. The dollar was at ¥124.67, up from ¥124.20 late Friday in New York. The speculation that Federal Reserve may continue cutting interest rates in an effort to stoke stronger U.S. economic growth was fueled by a report in the Washington Post over the weekend and a Wall Street Journal article Monday. "If you believe the Fed is going to ease, you would take it as another positive for the dollar," because traders have tended to see such moves as "pro growth [for the U.S.] and the dollar normally gets a bit of a spurt," said David Mozina, head of G10 strategy with Banc of America Securities in New York. By contrast, the European Central Bank is still showing signs of reluctance to cut interest rates in the near term, he said. By the same token that Fed rate cuts would probably be viewed as mildly positive for the dollar, traders would probably see the ECB continuing to stay put instead of making that effort to ramp up euro-zone economic growth as modestly negative for the euro. While Germany's IFO business sentiment index posted its fifth consecutive monthly decline in October, down to 87.7 from 88.2 in September, money supply growth in the euro zone exceeded expectations, noted Marc Chandler, chief currency strategist with HSBC in New York. "Credit growth remains strong and on the margins the report would seem to lean against an ECB rate cut," Mr. Chandler said. Earlier in the global session, the yen weakened to the cusp of the ¥125 mark, after a top Japanese Finance Ministry official reiterated Monday that based on the nation's economic fundamentals, there is no reason for the yen to get stronger. "The conditions aren't there for the yen to strengthen," said Ministry of Finance International Bureau Chief Zembei Mizoguchi. Also in Japan, Heizo Takenaka, Japan's financial-services minister, met with the head of the country's biggest banks2 for the third time in less than a week to try and put together a plan to solve Japan's bad-loan problem. Traders in the yen are "really perplexed at the moment because of the variety of comments from officials," Mr. Mozina said. However, he added that over the very near term, "any watering down of proposals" to force banks to write off their huge load of bad debts and non-performing loans and to take steps intended to counteract deflation "would see the yen with a slightly stronger bias." Following the election of left wing candidate Luiz Inacio Lula da Silva4 in Brazil, the real opened close to its late Friday levels, at 3.740 real to the dollar, one centavo weaker than Friday's close of 3.730 real. Mr. da Silva, who defeated government-backed candidate Jose Serra in a Sunday runoff vote by 61% to 39%, is scheduled Monday to provide details of his economic team, which is being closely awaited by foreign-exchange traders. online.wsj.com