31 October 2001, 08:59 Forex - Dollar rangebound in midafternoon Tokyo ahead of US GDP data
TOKYO (AFX-ASIA) - The dollar was rangebound in midafternoon trade,
with investors sidelined ahead of the release later today of US
third-quarter GDP data, dealers said.
Interest in the upcoming GDP data has grown stronger after the
Conference Board reported that consumer confidence index fell to 85.5
in October from 97.0 in September, the fourth consecutive monthly
decline in the confidence measure and the lowest level since Feb 1994,
dealers said.
Shinsei Bank foreign exchange manager Masanori Hirabayashi however
said the US data is not likely to have a material impact on dollar/yen
trade since the market has already priced in a likely weak outcome.
"Besides, the market still has some confidence in the dollar
because of expectations for continued policy responses, including
monetary and fiscal action," he said.
"However, concerns over the debt situation in Argentina, terrorism
and the prolonged military operation in Afghanistan should continue to
weigh on the top-side of the US currency."
In addition, expectations that speculators are getting more
inclined to test the downside of the dollar against the yen due to the
confirmation of strong resistance at the 123.00 yen level, will also
pressure the unit, dealers said.
"Technically, the key chart level is 121.20-121.30 yen, and if
these levels are broken, the dollar may return to the trading band seen
before active intervention by the Bank of Japan," Hirabayashi said.
The euro was also confined to a tight trading range ahead of the US
GDP data and amid uncertainty over eurozone near-term monetary policy
management, dealers said.
"If the ECB offers rate cuts at the next ECB meeting and if
concerns over economic and political problems strengthen, the euro may
test the 0.92 usd level," Hirabayashi said.
"But, if there is no rate cut and if the market regains confidence
in the US economy, the euro will slip back to below the 0.90 usd
level."
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