4 April 2001, 12:22 Forex: Euro down in early London trade on further weak euro zone data
LONDON (AFX) - The euro was lower against most leading currencies
in early trade, as the latest data provided further evidence that the
euro zone will not escape unscathed from the U.S. slowdown, dealers
said.
Sahab Jalinoos, currency strategist at UBS Warburg, said: "We see
the move as a correction within the longer-term downtrend in the euro."
He said today's German labour data added to evidence that the
largest European economy is slowing, with unemployment rising for the
third consecutive month.
"German unemployment data was disappointing and that is bad news
for the single currency. The economic outlook in Europe is not as as
positive as the market has been pricing in," Jalinoos said.
"All that together makes us think that the euro has more downside,"
he said.
In adjusted terms, the jobless total for Germany rose 12,000 in
March from February, was up 6,000 in western Germany and up 5,000 in
eastern Germany.
However, Bundesbank president Ernst Welteke's comments in an
interview with Focus Money suggested he is not satisfied with the value
of the euro, after the currency failed to fulfil hopes of a strong
rally against the dollar in the early part of this year.
The euro is "clearly undervalued", he said.
Commenting on the dollar, Jalinoos said there was disappointment in
the U.S. stock markets and in the U.S. interest rate outlook after
Monday's relatively strong NAPM numbers.
"Disappointment has led to big losses in the U.S. stock market, and
by extension has filtered out onto the dollar as well," he said.
Sterling tracked the euro higher in early trade.
"Euro/sterling moved higher, which is a sign that is is not just a
sterling strength," Jalinoos said.
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