22 October 2001, 09:52  Forex - Euro lower vs dollar at midafternoon Tokyo ahead of ECB

TOKYO (AFX-ASIA) - The euro continued weaker against the dollar at midafternoon, following a weaker-than-expected west German Ifo business sentiment survey, dealers said. However, they added that overall trading was thin and directionless, with investors reluctant to take any fresh positions ahead of the release of the Federal Reserve's beige book, as well as a European Central Bank governing council meeting. Dealers added that the market is also awaiting comment from a meeting of the regional branches of the Bank of Japan due for release today, aiming to gauge the economic situation after the terror attacks on the US. Bank of Japan governor Masaru Hayami said in a statement at the meeting of the regional branches that uncertainty over the future course of the Japanese economy is increasing following the Sept 11 attacks. Dealers said some investors are currently expecting a rate cut by the ECB at their meeting scheduled this Thursday following the weak Ifo figures. However, a dealer with a European bank said he does not expect the ECB to cut rates this week. "The Ifo survey came in weak. But I don't think the ECB will decide to cut its rate only because of one set of data," the dealer said. The dealer said the euro will trade weaker and be rangebound against the dollar this week, possibly at around the 0.8790 level. "I don't think the euro will benefit if the ECB decides to hold its rate unchanged. I think the euro will trade weaker against the dollar," the dealer said. The dealer said the dollar will move stronger against the yen this week, moving in a range of 120.00-122.00, benefiting from a falling euro. He added dollar movements are stabilising even amid continued uncertainty arising from the Afghan military campaign and the global anthrax scare. Even with fresh developments on the US anthrax front, "I think the dollar started moving in a relatively stable manner. I think investors are slowly getting used to that kind of news," the dealer said. He added concerns remain over the US economic outlook. "Some market participants are taking a closer look at the beige book release. But I don't think we can learn the full economic impact of the Sept 11 attacks from the beige book," he said.

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