Sun, Jul 06, 2003 - Page 10 News List

Currencies stagnate while US celebrates Independence Day


Major currencies marked time on Friday as US markets closed for the US' Independence Day, leaving trading rudderless for direction, analysts said.

The single European currency stood at US$1.1489 against US$1.1481 late on Thursday in New York.

The dollar was changing hands for ¥118.09 compared with ¥118.33 on Thursday.

Julian Jessop at Standard Chartered said trading had ground to a near-standstill amid a lack of direction.

"It is all very dead," he said.

There was little by way of economic data to inject any excitement into the day's proceedings with markets choosing to ignore German and British data.

Perhaps the only data to cause a ripple was German factory orders for May, which slumped 2.2 percent from the previous month -- a casualty of the euro's strength since the start of the year.

The German numbers were well below a market consensus for a 0.2-percent gain.

"This fall -- which more than reverses April's surprising rise -- is consistent with German survey and purchasing managers index data, and means orders are likely to have contracted sharply in Q2," said Neville Hill, economist at CSFB, referring to the April-June period.

The recovery on bond markets also detracted from the currency market.

But there was further evidence that policy makers are starting to be concerned by rises in bond yields.

"Policy makers are focusing heavily on the move in the bond market -- [Japanese] finance minister Masajuro Shiokawa said overnight that the recent rise in yields is nothing to worry about, although -- `various measures need to be considered if the rises continue in the future,'" Shahab Jalinoos at UBS Warburg said.

For now, currency markets remain calm despite the gyrations in Japanese government bonds, with continued fears of renewed Bank of Japan intervention keeping the dollar well supported below ¥118.00, Jalinoos added.

The euro was changing hands at US$1.1489 from US$1.1481 late on Thursday in New York, ¥135.68 (¥135.85), £0.6886 (£0.6879) and 1.5492 Swiss francs (Sf1.5493).

The dollar was being quoted at ¥118.09 (¥118.33) and 1.3485 Swiss francs (Sf1.3485).

The pound was at US$1.6688 (US$1.6685), ¥197.05 (¥197.43) and 2.2498 Swiss francs (Sf2.2498).

On the London Bullion Market, the price of an ounce of gold stood at US$351.30 from US$349.40 on Thursday afternoon.

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