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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (8161)	3/15/1999 11:40:00 PM
From: Les H	Respond to of 99985

Euro seen testing record lows amid EU fraud crisis TOKYO, March 16 (Reuters) - The euro may hit record lows against the dollar after the surprise resignation of the entire European Commission and amid persistent speculation of a near-term credit easing by the European Central Bank (ECB), dealers in Tokyo said on Tuesday. ''News that the European Commission had resigned triggered across-the-board selling of the euro. I think we could see the euro test record lows again in the near term,'' said Yasuharu Tsuru, manager for Mitsubishi Trust and Banking Corp's international treasury division. The entire 20-member European Commission resigned on Tuesday after a scathing independent report into fraud and cronyism at the top of the European Union's executive. The hard-hitting 144-page report, compiled by an independent panel of five experts in just six weeks, accused commissioners of losing control over the sprawling Brussels bureaucracy that proposes and implements EU laws. Traders said the euro fell to around $1.0830 just after the resignations were announced after being quoted at around $1.0910 earlier. ''News of the (independent panel's) report was in the market yesterday, so the Commission's resignation does not come as a complete surprise,'' said a trader for a European bank. ''But some traders in Tokyo were caught off guard,'' the trader said. The euro stood at $1.0837/47 at 0348 GMT, down sharply from $1.0940/45 in late New York on Monday. The euro fell to a record low of $1.0785 on March 4. Some Japanese investors hurriedly sold the euro against the yen to raise their hedge ratios, traders said. The euro stood around 127.90 yen compared with 128.65 yen in late New York. Dealers said the euro may have further room to fall ahead of a meeting of the ECB's governing council meeting on Thursday, as speculation of a near-term credit easing remains strong. ''We think the recent resignation of (German Finance Minister Oskar) Lafontaine has made it easier for the ECB to ease credit,'' said an analyst for a foreign bank. A credit easing by the ECB would be a negative factor for the euro unless the ECB cuts interest rates by 50 basis points or more, said Mitsubishi Trust's Tsuru. ''The euro will probably weaken if they cut interest rates by 25 basis points. But a 50 basis point cut could raise hopes for a recovery in euro zone economies and spur euro buying,'' Tsuru said.