Dollar At Three Year
Low
By
Larry Elliott
Economics Editor
The Guardian -
U
12-14-2
- The renewed threat of a war against Iraq and
production curbs from the oil cartel Opec sent the US dollar tumbling to
three-year lows against the euro yesterday and prompted falls in share
prices in both Europe and North America.
-
- Financial markets paid little heed to a less gloomy
than expected snapshot of US consumer confidence and instead were
preoccupied by geopolitical risks and the effect of rising fuel prices
on already weak corporate earnings.
-
- The jittery mood was reflected in the strength of gold
prices, which stood at $330 an ounce last night, close to three-year
highs, and the poor performance of equities.
-
- In London, the FTSE 100 closed down 57.2 points at
3878.1, its lowest level for two months, while an early 80-point drop in
the Dow Jones industrial average meant Wall Street was on course for its
second week of losses.
-
- Some support was given to both the dollar and shares
following the release of the Michigan consumer confidence survey, which
showed an improvement in sentiment from 84.2 to 87, above Wall Street's
estimate of 85.0.
-
- Analysts said, however, that despite the recovery in
sentiment from the nine-year low reached two months ago during frenetic
falls in the stock market, consumers were still only marginally more
upbeat than they were in the period immediately after September 11.
Consumers remained sensitive to fresh bad news, either from the fragile
US economy or from events in the Middle East.
-
- They cited an American military strike against Iraq,
North Korea's decision to reactivate a nuclear power plant and reports
that extremists linked to al-Qaida received a chemical weapon from
Saddam Hussein as sources of concern.
-
- "There's just not a lot of conviction here from the
point of view of buyers," said Richard Cripps, chief market strategist
at Legg Mason Wood Walker.
-
- "It's hard to get things started here - the market is
looking very heavy," he said.
-
- The euro shed nearly a quarter of a cent to almost
$1.0200 on the better than expected US data, but it quickly recovered to
trade around $1.0230 - more than 0.5% higher than the previous US
close.
-
- Earlier the single currency built on Thursday's sharp
gains to climb as high as $1.0259 - its highest level since mid-January
2000.
-
- The dollar also bounced up against the yen to �120.80,
more than �0.25 above the three-week lows hit just before the release of
the data, but down more than 1.5% from the previous US close.
-
- Oil futures were up sharply yesterday following Saudi
Arabia's speedy move to implement its share of the 7% cut in oil
production - about 1.7m barrels a day - agreed by Opec in Vienna on
Thursday. The price of crude for January delivery in New York was up by
more than 50 cents to $28.58 a barrel, while January Brent crude in
London rose by 43 cents to $27.30.
-
- Dealers fear that dearer energy will hit the spending
power of consumers and also affect the bottom line of companies which
are already struggling to pass on higher costs in an increasingly
competitive environment.
-
- Figures from the American government yesterday showed
that the price of goods leaving factory gates fell by 0.4% last
month.
-
-
- Guardian Unlimited � Guardian Newspapers Limited
2002
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