Dollar
Falls on Lower-Than-Expected GDP
Reuters
Friday, January
30, 2004; 9:38 AM By Manuela Badawy NEW YORK (Reuters) - The dollar
fell against the euro on Friday after a surprisingly lower than expected fourth
quarter U.S. gross domestic product report triggered a sell-off.
The U.S. economy grew at a 4 percent annual rate in the final three months
of last year, the government reported on Friday. GDP had been expected to show
annualized growth of 4.8 percent in the fourth quarter, according to a Reuters
poll, following a sizzling 8.2 percent pace in the third quarter. "We all
knew that Q3 couldn't last forever," said Lara Rhame, senior economist foreign
exchange at Brown Brothers Harriman & CO., in New York. "Four percent
is going to feel like a disappointment compared to the consensus and compared
to Q3 but it is still a very respectable rate of growth and details show that
the recovery is well on track including solid growth, and private investment data;
even though the dollar is selling off a little," Rhame said. Early Friday
morning in New York, the euro was up 0.15 percent at $1.2422, off its initial
post-GDP session highs of $1.2492 but still higher on the day against the dollar.
The dollar had been rallying after the Federal Reserve surprised the market
on Wednesday by dropping its pledge to keep rates low for a "considerable period."
The central bank replaced that phrase with an assurance that it "can be patient"
about lifting rates. Financial markets interpreted that shift in language
as a signal that the Fed was nearer a rate hike than had been previously thought,
giving the dollar a boost and sending both stocks and U.S. Treasuries downward.
Official U.S. interest rates remain at 1 percent, their lowest since 1958. Business
conditions in New York City improved for a fifth straight month in January, boosted
by a pick-up in the tourism and banking industries, a report published on Friday
showed. The National Association of Purchasing Management index of economic
activity in the Big Apple climbed to 257.3 in January from 242.6 in December.
Meanwhile, the European Monetary Affairs Commissioner Pedro Solbes said
on Friday he would like to see stability in the euro's exchange rate against the
dollar, but that the market set its value. He also said the rise in the
euro could stifle business confidence in the euro zone and reduce competitivity
if it continues. Earlier in the trading day, the greenback softened a touch
on news Japan intervened in record amounts of about $67.56 billion in January
in an attempt to stem the yen's rise against the dollar from crimping exports,
but still couldn't stop it from hitting a series of three-year highs. Against
the Japanese currency, the dollar declined to 105.72 yen < data. Reuters to according
yen, 105.42 around low three-year week?s this above far not> The University
of Michigan's final reading of January's consumer sentiment index, due about 9:45
a.m. EST, is expected at 103.0. The Chicago PMI, due at 10:00 a.m. EST, is seen
coming at 62.0 in January. Continue with: | 
