NewsMine — economy — united-states — 2003 — 2003-may-june — Viewing Item

Rate cut steepen dollar slide { May 21 2003 } Original Source Link: (May no longer be active)    http://money.cnn.com/2003/05/21/markets/bondcenter/forex.reut/ http://money.cnn.com/2003/05/21/markets/bondcenter/forex.reut/ Dollar hanging on Greenspan's words Fed Chairman to testify before Congress and sign of rate cut could steepen dollar's slide. May 21, 2003: 7:04 AM EDT LONDON (Reuters) - The dollar fell to a four-year low against the euro and neared the single currency's 1999 introduction rate Wednesday, but then stabilized before comments from Federal Reserve chief Alan Greenspan on a possible interest rate cut. Fed Chairman Greenspan testifies before the Joint Economic Committee of Congress and any hint of an interest rate cut on the way could hurt the dollar by extending its current yield disadvantage versus the euro and other currencies. Overseas investors could continue to pull out of U.S. investments tied to interest rates due to the poor returns, which would increase the dollar's decline. Greenspan has recently warned of a possible "unwelcome substantial fall in inflation" -- which the market has taken to mean deflation -- and analysts will be watching his comments on prices closely for clues to the next rate move. "Greenspan is supposed to talk about the economy. People will want him to touch on deflation concerns but he's not going to want to set off alarm bells," said Ian Gunner, head of foreign exchange research at Mellon Financial Corporation. "On the economy, it's going to be difficult for him to be too optimistic. But the tone of his comments are going to be 'Let's not get completely desperate because we can cut rates again'." Early Wednesday, the dollar had inched up from its four-year low of around $1.1744 against the euro, within a whisker of the euro's $1.1747 launch rate in January 1999. The market remained on alert for any signs of covert Japanese intervention to curb export-damaging yen gains against the dollar after traders detected the Bank of Japan's hand in the market on Monday. The dollar was unchanged from late New York levels just above ¥116.60, above Monday's ¥115.10 two-year low. Dollar sentiment also was dampened by news the U.S. administration raised its terror alert status to the second-highest level, citing the risk of attacks on U.S. soil. "They don't help the dollar. They suggest the fight against terrorism will continue to grind along," said Rob Hayward, senior currency strategist at ABN Amro in London. "It's something which probably hurts the US economic outlook in terms of consumer and business confidence, it probably means greater spending which at the margins damages the budget." Adding to the dollar's woes, billionaire financier George Soros said late Tuesday he was selling the greenback. Soros famously bet against the British pound when it crashed out of Europe's currency grid in a crisis in 1992. Traders think Washington is comfortable with a weaker dollar, despite its official "strong dollar" policy, after U.S. Treasury Secretary John Snow called recent currency movements "fairly modest" this week. Japan's top financial diplomat, Zembei Mizoguchi, warned Wednesday against the yen's stronger trend, saying officials were on the alert for excessive moves and would act if needed. In Europe the Bundesbank said stagnation was more likely than recession in Germany and noted there was "no doubt" life had become harder for German exporters in part due to the euro's rise. -------------------------------------------------------------------------------- Copyright 2003 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

318b congress tax cut { May 22 2003 } California borrow record 11b { May 2 2003 } California near financial disaster { June 30 2003 } Consumer spending dips { May 15 2003 } Deflation like great depression { June 20 2003 } Delfation fears grow { May 16 2003 } Delfation fears Dollar falls lower to euro { May 2 2003 } Dollar stable but sick { May 12 2003 } Dow surges 9000 Ehrlich withholds maryland funding { June 26 2003 } Fed cuts to halt deflation { June 24 2003 } Fed rate cut one percent { June 25 2003 } Fed rate unchanged { May 6 2003 } Fed ready 45 year low rate cut Fed refuses to print money Greenspan hits back at buffett warnings Insiders stock selloff { June 8 2003 } Job market worst since 1990 { June 17 2003 } New hyper bull market by small investors { June 22 2003 } Prices decline deflation fears Rate cut steepen dollar slide { May 21 2003 } Sars might ease deflation { May 9 2003 } States horrid budget struggle { June 26 2003 } Stock losses 100 000 fewer millionaires { June 11 2003 } Stocks drop terror madcow fears { May 20 2003 } Stocks fall dow below 9000 { June 10 2003 } Stocks rise cisco sun { May 12 2003 } Tech jobs moving over seas { May 19 2003 } Us cut 6000 airport screeners Files Listed: 30

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