8 June 2005, 09:49  Dollar mixed in midday Tokyo ahead of Greenspan testimony

The dollar was mixed against other major currencies, with the US unit strengthening against the yen, while easing against the euro in choppy trading ahead of tomorrow's congressional testimony by US Federal Reserve Board Chairman Alan Greenspan, dealers said. Yesterday, the dollar slipped below the 107 yen level for the first time in almost three weeks, as the market turned wary about prospects for the trend of US interest rates, the macro-economy and monetary policy following remarks by Greenspan via satellite to a banking seminar in China. Greenspan said yesterday that the recent drop in long-term interest rates could signal economic weakness, sparking speculation that the US central bank may be close to ending its rate-hiking cycle. The release last week of a weak US job report also stood as a key factor in supporting such speculation, dealers said. "The bullish outlook on the trend of US interest rates is receding following last week's weak jobs report, opening the way for near-term weakness of the dollar against the yen," Mizuho Corporate Bank foreign exchange manager Tatsuro Karitani said.The euro strengthened slightly against the dollar, helped by short-covering and an upturn against the yen, dealers said. But few dealers think the euro's rise will be sustained. "Given deepening economic and political problems in the euro zone, the euro is most likely to be exposed to downside risk, rather than continuing its rise," Karitani said.

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