30 October 2001, 12:18 Forex - Dollar slightly higher in early trade ahead of US confidence data
LONDON (AFX) - The dollar was slightly higher in early trade
following yesterday's sharp sell-off with traders reluctant to take
positions ahead of crucial US consumer confidence figures later today
and amid general unease about the state of the US economy, dealers
said.
The dollar was holding steady after suffering its worst day
yesterday since Sept 11 on growing concerns that this week's data will
disappoint on the downside.
Today's key US data is October's Conference Board consumer
confidence index, which is due out at 3.00 pm. Other important data
this week includes US GDP, NAPM and employment figures on Friday.
Neil MacKinnon, senior currency strategist at Merrill Lynch, said
the markets are displaying some "signs of anxiety" about the state of
the US economy, and are worried that "things aren't really working out
to plan".
This was illustrated by Wall Street's 275 point decline yesterday
on the back of these concerns and worries about the protracted conflict
in Afghanistan.
MacKinnon said the bulk of the price movements involve positioning
by speculators, with institutions and funds waiting on the sidelines.
The euro in particular is benefiting in this environment now that
long positions have been unwound. "It's a better base for the euro,"
said MacKinnon.
Rob Hayward, forex strategist at ABN Amro, said the markets are
looking to see if the euro can go up to 0.9140 usd, but concedes that
most of the gains are to with the dollar's weaknesses.
WestLB's Richard Grace said the euro's underperformance against the
Swiss franc and sterling "underlines the markets distrust about the
developments in the euro zone where the ECB shows little signs to shift
away from its backward-looking policy approach".
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