Sun, Nov 16, 2003 - Page 10 News List

Foreign exchange markets ignore US economic data


The dollar confounded analysts Friday by shrugging off weaker-than-expected US data on retail sales and industrial production, though the euro still posted one-day gains against the US currency in thin trading.

The single European currency was at US$1.1760 in early European trading from US$1.1728 late on Thursday in New York.

The dollar was at ¥108.32 from ¥108.11 on Thursday.

"It's a quiet Friday market and it doesn't take a lot to move the market," observed Steve Barrow, currency strategist at Bear Stearns.

The euro had earlier made a run up to US$1.18, but failed to make lasting gains.

This was despite news of a 0.3 percent drop in last month's retail sales, following a 0.4 percent decline in September. This was the first back-to-back fall in sales in 21 months.

Meanwhile, US industrial production rose just 0.2 percent last month -- half the gain expected by the market.

Still, US economists expressed optimism about results going forward, highlighting the marked improvement in manufacturing survey data, and the positive indications for the all-important Christmas sales season from consumer confidence figures.

The University of Michigan's consumer sentiment index rose more than expected to 93.5 in November from 89.6 in late October. This is the highest reading since May last year..

"We think cooler sentiment on reflation globally will help push the euro higher against the dollar and yen in the short term -- especially with the Nikkei looking clearly vulnerable," said Mansoor Mohi-uddin, a strategist at UBS.

Political factors of a different kind may seep into the market next week, analysts said, noting that the US Congress is scheduled to complete work for the year by the end of the coming week.

Any indication that the US will ignore WTO calls to alter its international corporate tax regime could raise the prospect of billions of dollars of sanctions from the EU.

Barrow said this would be negative for the dollar.

The euro was changing hands at US$1.1760 from US$1.1728 late on Thursday in New York, ¥127.39 (¥126.79), £0.6984 (£0.6954) and 1.5645 Swiss francs (Sf1.5693).

The dollar was being quoted at ¥108.32 (¥108.11) and 1.3305 Swiss francs (Sf1.3378).

The pound was at US$1.6838 (US$1.6862), ¥182.41 (¥182.39) and 2.2404 Swiss francs (Sf2.2650).

On the London Bullion Market, the price of an ounce of gold stood at US$396.7 against US$395.40 on Thursday afternoon.

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