Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : January Effect 2003 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (455)	5/7/2003 4:47:22 PM
From: RockyBalboa	Read Replies (2) \| Respond to of 666

Reuters Euro Slips Ahead of ECB Rate Decision Wednesday May 7, 4:13 pm ET By Javier David NEW YORK (Reuters) - The euro fell against the dollar and yen on Wednesday, hurt by speculation that the European Central Bank may reduce interest rates and erode the yield advantage enjoyed by the single currency. In a whipsaw session that saw the European currency shed more than a cent from Tuesday's 4-year low as traders booked profits, markets began to look ahead to the ECB's interest rate policy meeting scheduled for Thursday. Analysts expect the ECB to keep benchmark rates steady at 2.25 percent, as monetary policymakers have in recent days telegraphed those intentions to the market. But in the wake of Tuesday's decision by the Federal Reserve to hold U.S. rates steady, while indicating the economy still faced further weakness and falling prices, market observers say the ECB can ill afford to hold off on cutting much longer, as Europe's fundamentals deteriorate by the day. "There is some dialogue occurring in the market that the ones that have the opportunity to stimulate their economies are the Europeans, and that would be with a rate cut," said Michael McGuinness, head of North American sales at American Express Bank in New York. On Wednesday, Germany -- the euro zone's largest economy -- announced that the jobless rate hit a five-year high. Though a rate cut could stimulate the economy, it would narrow the yield differential that has allowed the euro to rally broadly, McGuinness added. "That's why we're off by more than a cent," he said. The euro fell as far as $1.1331 against the dollar (EUR=), recovering slightly to trade near $1.1370 in late U.S. dealings. It was off by more than 0.60 percent on the day. The euro also gave up Tuesday's four-year low against the yen, falling 1.70 percent from its prior U.S close to stand near 132.23 yen (EURJPY=). Broad dollar weakness converged with heavy euro/yen liquidation, traders said, dragging the dollar to its lowest in 10 months against the Japanese currency. In late U.S. trading, the dollar bought 116.30 yen (JPY=), off more than 1 percent on the day. Dealers say the yen's sharp rise against most major units heightened the risk that Japan could sell its currency in order to weaken it. "The next major level to look out for is 115.80 and I think that as we move toward that level the risk of Bank of Japan intervention could become more acute," said Alex Beuzelin, foreign exchange market analyst at Ruesch International in Washington, D.C. DOLLAR REBOUNDS ON EURO On Tuesday, the Fed signaled they may reduce U.S. rates from their current 1.25 percent. Meanwhile, European interest rates are at 2.50 percent, leading investors to shift money into euro zone assets and out of the United States. However, the euro's nearly 8 percent surge against the dollar in the last month is raising concerns it has moved too far too fast. Several German manufacturers have complained that the strength of the currency has hurt their competitiveness in global markets.