Posted on 05/27/2005 12:13:23 AM PDT by Righty_McRight
TOKYO (Reuters) - The dollar held near a seven-month high against the euro on Friday on solid U.S. growth figures and expectations that France would say "Non" to an EU constitution in an upcoming referendum.
The U.S. currency was also in sight of seven-month peaks struck against sterling and the Swiss franc on Thursday when it got a boost from revised data showing the U.S. economy expanded at an annual rate of 3.5 percent in the first quarter.
That compared with the government's previous estimate of 3.1 percent growth, though the revised figure was a tad lower than economists' forecasts.
"Taking away this referendum, the euro is in a down move anyway and the dollar's strengthening across the board," said Luke Waddington, head of forex dealing at Royal Bank of Scotland.
"Not having significant downside surprises is good," he said, referring to the latest U.S. economic indicator.
The U.S. gross domestic product data supported views that the economy is on track for steady growth and that the Federal Reserve will keep raising rates at a "measured" pace.
It contrasts with a sluggish economic outlook for the euro zone and thus the common currency, which has also been rocked by the possibility France could reject the European Union constitution on Sunday and raise doubts about the bloc's future.
Polls show rejectionists leading in France and in the Netherlands, which votes on Wednesday.
The treaty, intended to simplify decision-making in the bloc following its enlargement to 25 member states last year, must be adopted by all EU members to take effect.
"Clearly, the euro will sell off in an immediate, knee-jerk fashion if France votes 'no'. How much may depend partly on the margin of the vote, however," JPMorgan Chase said in a report to clients.
At 0330 GMT the euro bought around $1.2520, little changed from late trading levels in New York, where it fell as far as $1.2495, the lowest since October.
The dollar fetched around 1.2355 Swiss francs, just off a seven-month high of around 1.2380 francs.
Sterling was at $1.8225, up about 0.1 percent but in sight of the seven-month low of $1.8186.
YUAN STORY
The dollar was little changed at around 107.95 yen.
That was not far from a one-month high of 108.30 yen struck on Monday, though dealers said dollar sell orders by Japanese exporters were lined up around that level and lower.
The yen stayed supported by expectations that China would revalue its currency, though traders said more investors were expecting a change later rather than sooner given a perception that the United States was easing pressure on Beijing.
U.S. Treasury Secretary John Snow told Congress on Thursday he was confident that China would change the yuan's decade-old peg of near 8.3 per dollar within the next six months.
"They have softened their tone from 'do it, do it, do it'," said a trader at a European brokerage.
Beijing has said it would not buckle under U.S. pressure and would loosen its peg when it best suits China.
That position was reinforced on Friday when a senior Chinese government economist said in published remarks that China had still not made enough progress to prepare its economy and financial system for a stronger currency.
"It will be better to keep the renminbi's exchange rate stable for another two years," said Zhang Yansheng, head of the National Development and Reform Commission's External Economy Research Institute.
I guess that helps explain the decided lack of goldbug threads lately.
If I see one more "gold could reach $1000 an ounce" commercials...
The time to buy gold (or anything else) is when nobody is trying to convince you to buy gold.
But, you probably already knew that.
Paging Mr. Soros - Your office is on the line...
Telephone call for Mr. Buffett. Mr. Warren Buffett, please pick up the white courtesy phone.
"Pssssssst...
Buy low, sell high."
Margin call, Mr. Duke.
Micheal Savage is deeply saddened.
Buffet, Soros, and FR's goldbugs are decidely VERY unhappy. LOL
Purely an excuse. There was no reason the unproductive Western European economies should have had a currency run-up in the first place. This is just the market looking for an event.
TDIDS..
Sorry, still in last congress mode.
BTW.. Did anyone hear the rumor that Hillary was arrested yeaterday for trying to sneak Daschle into the senate with a Sox the cat mask on?
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