By James Thornhill, BridgeNews New York--Feb. 16
The euro found firmer ground against the dollar overnight after U.S. Treasury secretary Paul O'Neill said in a German press interview that the U.S.does not actively pursue a stronger dollar. The U.S. Treasury subsequently came out to say there had been no change to the strong dollar policy, despite O'Neill's remarks. Dollar/yen slipped to a 10-day low of 114.56.
* * * Dollar/Swiss franc mirrored euro/dollar slipping in an inside range of 1.6684-1.6978. Sterling/dollar also traded inside Thursday's range of $1.4457-$1.4602. Meanwhile, dollar/Canada built on its recent gains up to a 10-week high of 1.5364. U.S. traders probably won't take kindly to O'Neill's remarks given that they are already beginning to see him as something of a loose cannon. However, the Treasury's swift re-affirmation of the strong dollar policy should limit the damage. U.S. January producer prices (0830 ET) are not seen giving the Federal Reserve too much cause for concern, while January industrial production (0915 ET) is seen showing some recovery from December's 0.6% slide. January housing starts (0830 ET) and the University of Michigan's February consumer sentiment survey are also due.