NewsMine — economy — united-states — 2004 — 2004-jan-mar — Viewing Item

Dollar slides as consumer data disappoint Original Source Link: (May no longer be active)    http://www.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1075982771084&p=1059656430155 http://www.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1075982771084&p=1059656430155 Lex News by email Dollar slides as consumer data disappoint Published: Feb 24 2004 09:59 | Last Updated: Feb 24 2004 17:48 The dollar fell back on Tuesday after a key US consumer confidence survey indicated sentiment was weaker than expected, prompting concerns about the strength of consumer activity. The euro, at $1.258 as US trading began, rose to $1.2705 after the data were released while sterling, already up about a cent after firm UK business investment numbers, rose another cent to $1.8919. Against the yen, the dollar eased to Y108.1 from Y108.4 earlier. The Conference Board's survey fell to 87.3 in February from a downwardly revised 96.4 last month. Economists had forecast the index would fall to about 92.5. February's reading was the lowest since October, and the biggest monthly drop in a year. "Maybe consumer activity going forward is a bigger problem than we had expected," said Tim Mazanec, senior currencies strategist at Investors Bank and Trust in Boston, who said the dollar and the euro looked to be stuck in their recent range. "The dollar closed poorly on Monday, but I don't see the euro uptrend back in place," he added. "This looks like consolidation for the next few weeks." The Hungarian forint rose to its highest level against the euro since the crisis that engulfed it late last year. Government proposals to cut spending and signs that Hungary's current account deficit, which hit 6 per cent of gross domestic product in 2003, has begun to fall have renewed some confidence in the currency. In addition, the central bank on Monday held interest rates at 12.5 per cent. The news helped push the euro to Ft258.1 - below Ft260 for the first time this year. Traders reported that stop-loss euro sales triggered at 260 and the government's conversion on Tuesday of about $300m in revenues from a sale of shares in oil company Mol contributed to the forint's strength. Foreign bond buyers also played a role, and bond yields fell by 10-15 basis points on Tuesday. But Budapest-based bond dealers said most foreign clients have stuck to a wait-and-see attitude, and analysts warned that the forint remained extremely fragile. Olivier Desbarres, an analyst at Credit Suisse First Boston in London, said any release of disappointing economic data or the failure of the government to follow through on promised budget cuts could very quickly demolish current confidence. "They are not quite out of the woods. All it takes is one wishy-washy statement from the finance ministry to undermine this," said Mr Desbarres. Tibor Draskovics, the new finance minister, is scheduled on Wednesday to reveal details of Ft120bn in spending cuts. In the second half of last year, investors withdrew an estimated $700m from Hungary's government bond market in reaction to the country's bulging current account and budget deficits.

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