28 November 2001, 12:21 Forex - Dollar weaker in early London trade after dip in US confidence data
LONDON (AFX) - The dollar was lower across the board in early trade
as the US recovery story took a knock from yesterday's
weaker-than-expected consumer confidence data, dealers said.
Further, the Dow Jones index's failure to break past the
psychological 10,000 point barrier also weighed on sentiment, they
added.
Razia Khan, economist at Standard Chartered said the weak reading
in the US consumer confidence survey was a setback for those expecting
a reasonably quick recovery.
Other data ahead of the confidence survey had been largely
inconclusive, lulling the market into thinking that recovery may not be
far away. The confidence numbers were a jolt, she added.
"The major thing is when the US will stage a recovery and will the
Fed have to cut rates even more," Khan said.
Michael Klawitter, economist at West LB expects the dollar to slide
further.
"Given the clear risk that today's Beige Book may also highlight
the downside risks in growth, we continue to expect some further
correction in the dollar," he added.
The dollar's general weakness was also apparent against the yen
which mostly shrugged off Standard & Poor's downgrade of Japan's
long-term local and foreign currency sovereign credit ratings by one
notch.
Sterling rose against the dollar led by the upbeat tone of
Chancellor of the Exchequer Gordon Brown's pre-budget report.
"Although Gordon Brown revised the UK 2001/2002 growth forecasts
slightly to the downside, the outlook remains significantly brighter
than in the Euro-zone," Klawitter at WEst LB said.
The euro also gained on the dollar. The morning's euro zone M3 data
had little impact. Euro zone October M3 was up 7.4 pct month-on-month,
compared with 6.9 pct in September.
Elsewhere, the Swiss Franc rose on speculation that the Swiss
National Bank may reduce rates.
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