9 May 2001, 13:47 Forex: Euro softer in early trade as dollar continues to defy gravity
LONDON (AFX) - The euro was softer in early trade as the continued
to defy gravity in the face of yesterday's U.S. figures showing the
first drop in productivity in six years, dealers said.
Dealers said that whatever bad news came out of the U.S, the euro
failed to gain ground against the dollar.
4cast currency strategist Chris Furness said the view that the
European Central Bank would not cut rates tomorrow was weighing on the
single currency.
"While some people are starting to say the ECB has been right to
keep rates on hold, we're not of that view, and its refusal to budge is
not helping the euro," he said.
Dealers said market participants will take an interest in German
industrial production figures even if they are not expected to
influence the ECB's decision on Thursday.
They noted European Central Bank president Wim Duisenberg's
statement in New York yesterday that monetary policy can make its best
contribution to overall stability by focusing on the maintenance of
price stability.
In the UK, the market is expecting the Bank of England's monetary
policy committee to cut rates by at least 25 basis points tomorrow at
the end of its two-day meeting.
Dealers said the naming of June 7 as election day came as no
surprise, adding that chancellor of the exchequer Gordon Brown's
campaign speech this morning provided no surprises.
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