Sun, May 04, 2003 - Page 10 News List

Dollar gains against Euro

AFP , LONDON

The dollar edged up against the euro on Friday on profit-taking, crossing the key 1.12 euro level several times.

The single European currency was being traded at US$1.201 against US$1.1235 in New York on Friday.

The dollar edged up to ?119.11 from ?118.52 late on Friday.

The euro softened in late London trading as market players took profits made in recent days and expressed relief that US unemployment data was not as bad as feared, analysts said.

"People were fearing a much worse number than originally expected ... So it was something of a relief," said HSBC currency strategist Mark Austin of the drop in US non-farm payrolls in April.

Payrolls were down 48,000 in April, below forecasts of a 61,000 decline.

Ahead of the release, the market had increasingly feared a much worse figure, however, after poor weekly jobless claims and US manufacturing data on Thursday.

"Expectations were being ratcheted up [to] a whisper number, just before the release, of 110,000. So initially there was relief at the headline number," said Nick Parsons, strategist at Commerzbank.

However, analysts warned that although the payrolls figure was not as bad as expected, it did not paint a flattering picture of the US economy, because non-farm payrolls had now dropped by 525,000 in the past three months.

But the dollar also benefitted from some adjustments to portfolios ahead of a long weekend in London, where Monday is a holiday.

After a strong run in the past few days, "we're probably seeing a little bit of profit taking" as well, said Paul Mackell, strategist at Dresdner Kleinwort Wasserstein.

US equity prices were also positive, lending some additional support to the dollar, he said.

But the dollar is expected to be on the defensive again as the month progresses, analysts said, given the pronounced concerns about the US economic outlook and mounting deficits.

"The market will probably start rebuilding dollar-short positions" as the month ensues, said Mackell.

The euro was changing hands at US$1.1201 from US$1.1235 late on Thursday in New York, ?133.41 (133.15), ?0.6993 (0.6971) and 1.5100 Swiss francs (1.5090).

The dollar was being quoted at 119.11 (118.52) and 1.3483 Swiss francs (1.3433).

The pound was at US$1.6017 (1.6107), ?191.75 (190.90) and 2.1595 Swiss francs (2.1637).

On the London Bullion Market, the price of an ounce of gold stood at US$340.50 from 338.95 late on Thursday.

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