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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