5 November 2001, 09:05 Forex - Dollar firmer in midafternoon Tokyo ahead of FOMC meeting
TOKYO (AFX-ASIA) - The dollar was firmer on position-adjustment
ahead of tomorrow's US Federal Open Market Committee meeting, dealers
said.
Market expectation has leaned towards the FOMC making a 50 basis
point rate cut, rather than a 25 basis point cut following the release
last week of a series of poor economic data.
On Friday, the US Labour Department announced that total nonfarm
payroll employment fell 415,000 in October from September, the largest
drop since May 1980.
The unemployment rate in October, meanwhile, rose to 5.4 pct from
4.9 pct in September, reaching the highest level since Dec 1996, and
recording the largest one-month climb since May 1980.
Sanwa Research Institute economist Masatoshi Moriyama said he
expects the US FOMC to decide on a 50 basis point rate cut, to help the
market, consumers and corporate managers maintain their confidence in
the monetary authority's ability to deal with the tough situation
surrounding the US economy.
BNP Paribas foreign exchange general manager Takashi Nakata,
however, said a 50 basis point rate cut may not support sentiment
towards the dollar, adding that "the solid performance on the US
capital markets last week indicated that the markets were already
prepared for a large rate cut".
Worries over the financial crisis in Argentina, the extent of
bio-terrorism in the US and the length of the military operation in
Afghanistan will also weigh on the dollar's top-side, dealers said.
"But, given the fact that the dollar did not show any strong
reaction to any of this news last week, the unit is most likely to
continue to be traded in the 121-123 yen range this week, if there are
no fresh developments," Nakata said.
The euro was lower due to uncertainty over monetary policy
management by the European Central Bank, although the consensus view in
the market is that the ECB will offer a 25 basis point rate cut at this
week's meeting, dealers said.
"Even if there is a rate cut by the ECB, however, any gains in the
euro are likely to be limited to around the 0.91 usd level," Nakata
said.
"But, if there is no rate cut, the euro may be pushed towards its
recent low."
© 1999-2024 Forex EuroClub
All rights reserved