Sun, Nov 02, 2003 - Page 10 News List

Economic data supports the US dollar's position

AFP AND AP , LONDON AND NEW YORK

The dollar remained firm in late London trade Friday on further positive US economic data, analysts said.

The single European currency slipped to US$1.1616 from US$1.1622 late on Thursday in New York.

Against the yen the dollar firmed to ¥110.01 from ¥108.72 on Thursday.

The dollar got a boost from the Chicago purchasing manager's index (PMI) for last month, which met expectations at 55.0 points from 51.2 in September.

Any figure above 50 points indicates a business expansion.

"This report is stronger than it looks and is consistent with the industrial recovery gathering pace," Ian Shepherdson, chief US economist for High Frequency Economics, said in reference to the activity report.

Credit Agricole Indosuez currency strategist Mitul Kotecha added: "The surveys of manufacturing continue to point to strengthening output over the coming months and the Chicago PMI is no exception. The strength of orders and production are particularly positive in this respect."

In addition to a better-than-expected jump of 7.2 percent in US third-quarter GDP Thursday, Treasury Secretary John Snow's comments on the currency policies of China and Japan were more conciliatory than expected.

US data on Friday were also generally positive. Personal income rose 0.3 percent in September after an upwardly revised gain of 0.3 percent the month before, while consumer spending fell 0.3 percent following August's upwardly revised 1.1 percent increase.

US consumer sentiment was higher in October as well.

The University of Michigan's consumer sentiment index rose to 89.6 last month from 87.7 in September and surpassed a preliminary October reading of 89.4.

Both surveys backed growth figures on Thursday, which indicated that the US economy grew at an annualized rate of 7.2 percent in the third quarter, far better than a consensus estimate of 6.0-percent growth. It was the strongest quarterly figure in more than 19 years.

The only remaining doubt over the US economy's direction remains employment and next week's payroll data will therefore be examined closely.

Meanwhile, the pound was particularly strong on expectations that the Bank of England will raise interest rates 25 basis points next Thursday.

The euro was changing hands at US$1.1616 from US$1.1622 late on Thursday in New York, ¥127.79 (¥126.41), £0.6849 (£0.6850) and 1.5519 Swiss francs (Sf1.5492).

The dollar was being quoted at ¥110.01 (¥108.72) and 1.3355 Swiss francs (Sf1.3317).

The pound was at US$1.6959 (US$1.6969), ¥186.56 (¥184.43) and 2.2654 Swiss francs (Sf2.2606).

On the London Bullion Market, the price of an ounce of gold stood at US$386.25 against US$386.50 on Thursday afternoon.

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