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To: Cynic 2005 who wrote (10038)	11/2/1998 10:13:00 AM
From: Cynic 2005	Read Replies (1) \| Respond to of 86076

I don't think that G7 will recommend any tough medicine. Each one of the member countries want "gain without pain" and are working hard at achieving that! PS: NAPM came out at 48.5 slightly weaker than expected. Who cares about these numbers anyway. We are never going down. Time to get more drunk and party again! -g- Monday November 2, 9:51 am Eastern Time Dollar starts US lower, G7 keeps hedge funds in focus NEW YORK, Nov 2 (Reuters) - The dollar opened down but off its lows as traders took profit on yen gains but remained on guard for more carry trade unwinding as global policy makers talked about strenghtening oversight of hedge funds. As they move toward shoring up the global financial system, the Group of Seven rich nations are zeroing in on hedge funds as among the primary culprits for recent instability, calling for greater supervision of the high-rolling investment pools. ''People are worried the G7 are going to move on restricting short-term capital flows, then these hedge funds will be forced to unwind yen-carry trades,'' said analyst David Gilmore. Gilmore, a partner at Foreign Exchange Analytics, said that most hedge funds had probably covered their yen shorts during the dollar's recent shakeout. But the notion that these investors might be reined back from agressive currency trading eliminates a major negative for the yen. The dollar opened at 115.35/40 yen, down from 115.95/05 at Friday's close, and at 1.6493/96 marks, compared to 1.6545/55. British Treasury sources on Monday said Chancellor of the Exchecquer Gordon Brown had written to the Basle Committee on Banking Supervision asking it to toughen up rules on transparency and disclosure governing hedge funds. The yen was also supported overnight as Japan's Nikkei 225 stock index jumped 2.86 percent as reports of an alliance between Fuji Bank and Dai-Ichi Kangyo Bank to form a partnership with Yasuda Trust fanned hopes that such a deal could help strengthen Japan's ailing banking sector. Japanese names were reported selling dollars overnight and the market was aiming to take out stop-loss sell orders below 114 yen, dealers said. But the dollar found its footing at 114.35, mirroring mark/yen, which did an about-face after hitting 69.48, its lowest level since mid March. The mark bounced against the yen and was buoyed against the pound as Bundesbank officials continued to dispatch any hopes for a German easing before the January start of European Economic and Monetary Union, dealers said. On Saturday, council member Edgar Meister was quoted in a magazine article as saying it was unlikely that German interest rates would be changed before the launch of the new currency. ''What you've got is the interest rate outlook and Meister saying that Germany won't cut rates and the UK is probably going to cut rates this week, so that's what's moving the cross,'' said Mike Malpede, forex analyst at Refco Group Ltd. Sterling was fell sharply, hitting a two-week low at 2.7510 marks, as Britain's economic outlook deteriorated. The Chartered Institute of Purchasing and Supply (CIPS) confirmed the bleak picture, keeping the focus on the two-day Bank of England Monetary Policy Committee meeting later this week. The CIPS purchasing index fell to 41.5 in October, its lowest since the series began in January 1992 and the seventh straight monthly decline. ''Everybody is expecting the UK will cut rates fairly soon so sterling is under pressure,'' said Jeffrey Yu, senior dealer at Sanwa Bank Ltd. Britain last cut rates in early October, reducing the repo rate to 7.25 percent from 7.5 percent. The pound fell to $1.6687/97 from $1.6737/47. Finally, the market was keeping an eye on the October U.S. National Association of Purchasing Management survey, due at 1000 EST. It sought confirmation that the U.S. economy was riding out financial market turbulence, as indicated in third quarter Gross Domestic Product data last week. The NAPM index is seen falling to 48.9 from 49.4 in September. The dollar also fell to 1.3465/75 Swiss from 1.3525/35 and rose to Canadian $1.5433/43 from C$1.5425/35. The Australian dollar rose to $0.6250/55 from $0.6235/40.