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

To: donald sew who wrote (12912)	5/5/1999 10:08:00 AM
From: Les H	Respond to of 99985

Dollar sags against euro at U.S. open NEW YORK, May 5 (Reuters) - The dollar backtracked against the euro at the start of U.S. trading on Wednesday amid market optimism that the conflict in Kosovo may be abating. The yen also started off firmer against the U.S. currency, but the dollar soon bounced higher, landing above 121 yen. Traders said a tumble in U.S. stocks on Tuesday and rising yields in U.S. Treasuries were weighing on the dollar. ''That's been shaking some people out, and the dollar's falling a bit against Europe,'' said a currency trader. Euro/dollar was trading at the highest levels in a week, having rebounded from last week's all-time low of $1.0537. The market was certain to keep a close eye on U.S. stocks for further direction. The Dow Jones industrial average fell 125 points on Tuesday and the yield on the 30-year U.S. Treasury bond closed at nine-month highs around 5.71 percent. At the open, euro/dollar was at $1.0669/75, compared to $1.0625/32 at the previous close. Overnight it had reached a high of $1.0679 -- an area which traders said would offer technical resistance. ''The euro is above of a trend line at the $1.0640-45 level. and as long as the market closes above there, more gains are possible,'' a trader said. A key factor in the euro's rebound is the growing sentiment that the Yugoslav conflict may be nearing an end, traders said. That prospect has eased concerns that European economies -- and the euro -- will be burdened by a drawn-out conflict. It has also served to stem safe-haven flows into the dollar and other U.S. assets, traders said. ''The negativism has ceased for now, although people are still going to be reluctant to be too bullish on the euro,'' a trader said. Foreign ministers from the Group of Eight countries were due to meet in Germany on Thursday in a bid for western countries and Russia to map out a settlement of the crisis. ''It's mostly being driven by the prospect of peace in Kosovo, and also $1.0690 is a major technical point which if broken will push the euro much higher,'' said an economist at a European bank. The Swiss franc also staged a rebound against the dollar, on the back of the back of the euro/dollar. The dollar opened at 1.5020/30 Swiss francs, versus 1.5105/15. Dollar/yen started off on a soft note at 120.41/51, compared to 120.77/87 at the previous close. But it then bounced higher to above the 121 level, although traders noted the market was thin due to a holiday in Tokyo. The economist said she expected the dollar to stay below 121.30 yen, a level which had provided technical resistance on Tuesday. Traders also predicted the market would orbit the 121 level, at least for this session. ''The key thing is what happens tomorrow when the Japanese (Golden Week) holiday is over and the market reacts to the yen at this level,'' a trader said. Other key factors due later in the week include EU unemployment data on Thursday and U.S. payrolls on Friday. The market will also watch the Bank of England's Monetary Policy Committee for a decision on interest rates on Thursday.