Currency Traders Face Bumpy Ride As Questions on Rates, EU Hit Market
NEW YORK -- Currency traders may be in for a bumpy ride this week as serious questions about interest rates, European Union and global trade bombard the market.</br></br>Market participants face a host of U.S. economic indicators that hold clues on the outlook for U.S. interest rates. What's more, Italy's chances of participating in Europe's single currency plan from the start hang in the balance as the country tries to put together a temporary government that can pass its 1998 budget. Meantime, U.S.-Japanese trade tensions have resurfaced in force, beating the dollar back below 120.00 yen.</br></br>Late Friday in New York the dollar was quoted at 1.7485 marks, up from 1.7435 marks late Thursday in New York. The U.S. currency also was quoted at 119.85 yen, down from 121.14 yen. Sterling fell to $1.6215 from $1.6244. About noon Monday in Tokyo, the dollar was trading at 120.23 yen and at 1.7508 marks.</br></br>"There isn't a [market] trend at this point. It's more just a matter of being reactive," said Scott Pardee, a senior adviser at Yamaichi International America in New York.</br></br>The renewed expectation of higher rates in the U.S. should lend some support to the dollar, especially if data on prices, sales and production slated for release this week provide Federal Reserve Board Chairman Alan Greenspan with ammunition to follow up on his intimations of higher rates.