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To: Enigma who wrote (20865)	10/6/1998 5:06:00 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 116823

E-mon Dollar is getting very weak now. Updated Tue Oct 6 16:42 ET Full:US FX Review: Dlr/yen 4-wk low; dlr/DM dn on US rate talk By Deborah Lagomarsino, Bridge News New York--Oct 6--The dollar crashed to a 4-week low against the yen on heavy Deutsche mark/yen sales and signs Japan's government is mulling further stimulus steps, and it erased most of its European gains against the mark on talk the Federal Reserve will hold an emergency meeting to further ease US interest rates before its next meeting in November. Before slumping in US trade, dollar/mark surged on heightened speculation that core European interest rates may be headed lower after the Bank of Spain slashed its intervention rate by a larger-than-expected 50 basis points to 3.75%. * * * At 1600 ET, the dollar was bid at 1.6302 marks and 130.91 yen, compared with 1.6349 marks and 134.43 yen late Monday in New York. For the global day, the dollar traded between 1.6239 and 1.6450 marks and 130.48 and 134.55 yen. The dollar plunged to a 1-month low of 130.48 against the yen on improved market sentiment toward Japan after the government said it is mulling further steps to lift the economy out of a crippling recession. Aggressive mark/yen sales further pummeled dollar/yen, with the cross taking out key support at 81.10. Dealers are now looking for the cross to fall as low as 77.00. Taiichi Sakaiya, director-general of Japan's Economic Planning Agency, said Prime Minister Keizo Obuchi asked his cabinet today to consider additional economic stimulus measures. Japan press reports suggested such a stimulus package could total 30 trillion yen, or $229 billion, double Japan's previous stimulus package. "It looks as if the markets are taking Japan's word as gospel," said Michael Scarlatos, currency strategist at Bankers Trust. "The market seems to be accepting Japan's promises to reform its banks and cut taxes," he added. Talk of further stimulus steps comes at a time Japan is struggling to get banking reform legislation approved in Parliament before its special session ends Wednesday. "The more real the banking reform is, the more economic contraction it transmits to the economy," Scarlatos added. "The more economic contraction there is, the higher the need for generous tax cuts as a bridge across this bank reform." President Bill Clinton kept the heat on Japan to take speedy action to buoy its economy, saying the health of Asia and the world depends on Japan. "The market feels Japan will address it (the stimulus) quickly," one senior dealer said. "If there's more delays and politics, the yen will weaken, but for now the market thinks it will be done sooner rather than later." For Bridge and Telerate users, please double click for the following chart: Media://analytics::/cmd=$$USDJPY/CH/HZ2/NVO Mark/yen ended at 80.04, down from 82.19 on Monday. Mark/yen traded in a global range of 80.01 to 82.34. For Bridge and Telerate users, please double click for the following chart: Media://analytics::/cmd=$$DEMJPY/CH/HZ2/NVO Dollar/yen and dollar/mark came under further pressure in afternoon trade on widespread rumors the Fed would hold an emergency meeting to further reduce US interest rates before its next scheduled meeting Nov 17. Chicago Federal Reserve President Michael Moskow said the Fed has nothing scheduled before the November meeting, but his remarks that the Fed always remains "on call" to meet by telephone if necessary further fueled the talk. Before diving on the rumors, the dollar surged against the mark as the Bank of Spain's much larger-than-expected rate cut fueled talk core European Monetary Union member states may soon follow up with their own rate cuts. While Spain's rate move was expected as part of interest-rate convergence among European Monetary Union member states before EMU starts in January, its size suggested global economic considerations also played a role. Spanish Prime Minister Jose Maria Aznar said the Bank of Spain's rate move is "an intelligent and positive Spanish response to the international financial situation." "The markets in Europe are setting themselves up for a surprise. If the economic crisis accelerates for the next 6 months or turns into Armageddon, then Germany may consider cutting, but we're nowhere near there yet," Scarlatos said. For Bridge and Telerate users, please double click for the following chart: Media://analytics::/cmd=$$USDDEM/CH/HZ2/NVO Dollar/mark's runup stalled out near 1.6450 and dealers then drove the pair ever lower, seizing on the Fed rumor partly as an excuse to dump more dollars. "There was some disappointment we couldn't get back over 1.6480. The more the price action stays below 1.6480, the more likely we test the 1.6150 level," one senior dealer said. "My gut tells me this is overdone, but the technicals tell you it's not overdone, so what do you do?" Remarks from European Central Bank Board Member Tommaso Padoa-Schioppa that there is no need for a cut in the core euroland interest rate "as things stand today" poured cold water on speculation European central banks are preparing to act. Dollar/yen's slide stalled out near 130.50, but the carnage today has dealers' sights set on 129.57, support from a long-term trendline from April 1995. Dollar/Swiss franc ended at 1.3396 versus 1.3420 on Monday, shadowing dollar/mark, after trading in a global range of 1.3510 to 1.3350. For Bridge and Telerate users, please double click for the following chart: Media://analytics::/cmd=$$USDCHF/CH/HZ2/NVO Sterling pound ended at $1.6833 from $1.6903 on Monday and traded in a global range of $1.6802 to $1.6888. Sterling ended lower despite reduced expectations the Bank of England's Monetary Policy Committee will ease rates this week after UK May and June average earnings were revised higher. For Bridge and Telerate users, please double click for the following chart: Media://analytics::/cmd=$$GBPUSD/CH/HZ2/NVO End

To: Enigma who wrote (20865)	10/6/1998 9:25:00 PM
From: Serge Collins	Read Replies (5) \| Respond to of 116823

enigma, You make a valid point and I tend to agree with you. However, the world seems to think differently at the present time. People consider something valuable only if it can create income and not if it can only, under certain extreme scenarios, preserve it. What is your response to those who say, with some justification, that almost every ounce ever produced is still in circulation. And those who claim that every spike in the price of gold acts as a magnet for sellers and not as an attraction for buyers.