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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