29 October 2002, 15:01  FOREX-Sluggish dollar plays data waiting game

LONDON, Oct 29 - The dollar hit its lowest in two weeks against the euro and in nearly three weeks against the yen on Tuesday, as investors fretted upcoming U.S. data may point to a slowdown in the world's largest economy. The U.S. Conference Board issues its gauge of consumer sentiment for October at 1500 GMT and economists polled by expect the index to fall to 89.7 from 93.3 the previous month.
Advanced readings for third-quarter gross domestic product and jobs data are also due later in the week, as well as purchasing managers' data. "Market sentiment is shifting once again, to focus on the risks to the U.S. economy," said Ian Stannard, currency strategist at BNP Paribas.
"There has been increasing speculation that the Fed will cut rates next week, and this is feeding through into a weaker dollar." The Fed holds its next policy-setting meeting on November 6.
The dollar was trading around $0.9840 at 1040 GMT, only slightly firmer than two-week lows of $0.9848. Against the yen, the dollar was trading just above 123.30, just above its lowest levels in almost three weeks of 123.20, hit in Asian trade.
Analysts noted a Fed cut would further the dollar's interest rate disadvantage versus the euro -- where the ECB's main rate is at 3.25 percent versus the Federal funds, currently at 1.75 percent. "For the currency in a risk-averse market, yield advantage is important and as the U.S. loses yield advantage then it does tend to weigh on the dollar," said Steven Saywell, foreign exchange strategist at Citibank.
U.S. stocks also fell on Monday, breaking into a three-week rally, on worries about the U.S. economy, and stock index futures were indicating a weaker open on Wall Street. //www.forbes.com

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