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.

Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: ChinuSFO who wrote (501351)	12/1/2003 9:13:57 AM
From: Kenneth E. Phillipps	Read Replies (3) \| Respond to of 769667

Dollar Extends Slide, Drops to New Record Low Versus Euro Dec. 1 (Bloomberg) -- The dollar fell to a record against the euro and dropped versus 11 other major currencies after an industry report showed manufacturing in Europe expanded in November, pulling investors away from U.S. assets. ``We have very few investors willing to take long dollar positions,'' Nick Parsons, head of global currency strategy at Commerzbank AG in London, said in a radio interview. Demand for the euro was spurred by an industry report showing European manufacturing expanded last month at the fastest pace since February 2001, adding to signs the region's economy is recovering. Japan's Nikkei 225 Stock Average had its biggest gain in three months, spurring gains in the yen. The dollar weakened to $1.2010 at 8:38 a.m. in New York, according to EBS, from $1.1995 late on Friday. The dollar has shed about 13 percent versus the euro this year, and weakened as far as $1.2042 earlier. The euro debuted at about $1.17 in January 1999. The dollar is within a cent of falling to an 11-year low versus the British pound. It weakened today to $1.7258 per pound from $1.7222 Friday. With a decline past its October 1998 low of $1.7345, the dollar would be at its weakest since 1992. Dollar losses deepened today after a European industry report showed manufacturing expanded in November at the fastest pace since February 2001. An index based on a survey of about 3,000 companies compiled for Reuters Group Plc rose to 52.2 from October's 51.3. Gold prices rose. The Dollar Index, which charts the currency against a basket of six currencies of U.S. trading partners, was at 90.08, and fell as far as 89.88 earlier, the lowest since January 1997. It's down 11 percent this year. The index's record low is about 78 in 1992. The index is weighted about 58 percent to the euro and 14 percent to the yen, with the remainder divided between the pound, Canadian dollar, Swedish krona and Swiss franc. Twin Deficits ``As strong as the U.S. economy may be, it's not enough to attract flows'' of capital, said Adrian Schmidt, head of foreign- exchange strategy in London at Royal Bank of Scotland Plc, the U.K.'s second-biggest bank by assets. The dollar has shed 3 percent versus the euro this quarter, partly on concern a widening U.S. current account deficit and a record government budget shortfall will combine to reduce demand for the currency. The U.S. needs $1.5 billion a day in foreign investment to compensate for the gap in its current account and keep the dollar from weakening. The shortfall in the budget may widen to $600 billion in the fiscal year that began Oct. 1, Merrill Lynch & Co. estimates. ``It's all about fund flow, and the U.S. isn't getting enough,'' said Tohru Sasaki, a currency strategist in Tokyo with J.P. Morgan Chase & Co., and a former Bank of Japan official. ``The dollar is weak and going to remain so.'' J.P. Morgan forecasts the dollar will drop to $1.22 per euro by the end of the year and $1.25 in the first quarter of 2004. Demand for Yen The yen rose to 109.37 from 109.63 late on Friday. Japan's Nikkei 225 stock average climbed 3 percent helped by gains for banks such as Mizuho Financial Corp. Merrill Lynch & Co. is recommending investors buy shares of Japan's banks because the industry is making progress in reducing its bad loans. ``There is a lot of pressure for the yen to appreciate,'' said Francesca Fornasari, a currency strategist in London at Morgan Stanley, the second-largest securities firm by capital. Eighty-four percent of the 49 analysts, investors and traders polled by Bloomberg News Friday from Tokyo to New York advised buying or holding the euro versus the dollar, little changed from a week earlier. ``We are not looking for it to spiral out of control, but to decline in the order of 1 to 2 percent a month,'' said Parsons of Commerzbank. `Creeping Protectionism' Declines in the dollar may be limited on expectations the U.S. will repeal tariffs on imported steel. President George W. Bush may announce as early as this week he will end the duties after trade partners threatened to retaliate with $2.3 billion of sanctions on American goods, a White House official said. Trevor Dinmore, a currency strategist in London at Deutsche Bank AG, the third-largest trader in the currency market, said the end of tariffs would be ``positive'' for the dollar. ``The `creeping protectionism' mentioned in many recent commentaries is not advancing as quickly as some in the market had suspected,'' Dinmore wrote in a report today. The Bush administration's decision on Nov. 18 to impose limits on some textile imports from China contributed to the dollar's biggest drop in 2 1/2 years against the euro. Two days later, Federal Reserve Chairman Alan Greenspan said an increase in protectionism may destabilize the world economy and result in greater disruption of financial markets. Current Account The deficit in the U.S. current account, the broadest measure of trade, held at a record $138.7 billion in the second quarter. The euro region and Japan have surpluses. An industry report today will probably show a gauge of U.S. manufacturing rose to a four-year high in November, according to the median estimate of a Bloomberg News survey of economists. A reading of 58.1 is likely for the Institute for Supply Management's factory index, according to the median of 55 forecasts in a Bloomberg News survey. The index hasn't been that high since November 1999. As the U.S. economy accelerates, it takes in more imports, swelling the trade deficit and boosting the amount of capital it needs to attract from foreign investors. Last Updated: December 1, 2003 08:40 EST