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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (46347)	2/16/2004 6:12:26 AM
From: elmatador	Respond to of 74559

Euro rally stalls ahead of Trichet speech By Neil Dennis Published: February 16 2004 10:09 \| Last Updated: February 16 2004 10:17 The dollar edged higher against the euro on Monday as rumours that the European Central Bank had intervened to weaken the single currency on Friday added to caution ahead of a speech by the bank's president, Jean-Claude Trichet. "Rumours of ECB intervention last Friday were unfounded, but nonetheless were sufficient to help the euro pull back sharply," said Mitul Kotecha, currencies strategist at Credit Agricole Indosuez. In early European trade, the euro was at $1.2760, down from $1.2790 at the New York close on Friday. This was down from about $1.2890 before the intervention rumours. "We suspect that much of the move was related to short-covering amid a market very short on the dollar," added Mr Kotecha. Mr Trichet's speech to the European parliament later in the session is expected to focus on currency market volatility and he is expected to be optimistic on the economic recovery. Meanwhile, Hans-Werner Sinn, the chief executive of Germany's influential economic institute Ifo, said he thought the ECB should intervene in the foreign exchange market to bring the euro below $1.20. He added that by buying about $30bn it was well within the central bank's abilities to aim for a 10 per cent fall. "Without the support of the US, we believe that unilateral ECB intervention may produce a near-term retracement in euro/dollar but is unlikely to engineer a shift in the trend of a gradual grind higher as the dollar adjusts lower over coming years," said Steven Saywell, senior currencies strategist at Citigroup. Intervention has benefited Japan, said Sadakazu Tanigaki, finance minister, in parliament on Monday, saying direct action soothed market sentiment and hinting authorities would continue to sell yen as needed. "Our basic stance is that we will take necessary measures when markets become disorderly through speculative moves," said Mr Tanigaki. In early European trade, the yen was unchanged from Y105.41 as seen at the New York close on Friday.