10 August 2001, 15:14  Forex - Euro steady in midday London trade as market consolidates

LONDON (AFX) - The euro was largely unchanged from morning levels in midday trade, as the market consolidated after yesterday's sharp rise, dealers said. "Today we are seeing some consolidation. Yesterday we almost saw dollar panic but there was real money behind the euro's rise, not just speculative money. Now people are getting their breath back and I expect tight ranges for the rest of the day," Mitul Kotecha, head of currency research at Credit Agricole Indosuez said. "The pressure on the Bank of Japan to ease monetary policy is leading to growing speculation. But if they ease, it could end up damaging the yen," he added. Economists said they expected the dollar to resume its weakening trend after this period of consolidation. "The equity markets still look vulnerable and there are continuing questions over dollar policy," Kotecha said. Deborah Reed an economist at Bank of America said: "The Beige book and the numbers out of the US suggest the slowdown is spreading and nailed on the head hopes of a quick recovery." "The feeling is that the US is not eager for a strong dollar anymore regardless of what Treasury Secretary O'Neil says," she added. Sterling was weakened slightly against the dollar, giving up its gains from this morning. "It seems to be lagging the euro's gains, perhaps due to its strength against the euro. Also there are doubts about the UK economy but I think sterling will recover," Kotecha at Credit Agricole Indosuez said.

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