LONDON, Oct 8: The euro ticked higher against the dollar on Monday, rising slightly above the $0.92 level, but the single currency’s gains were limited as investors remained cautious after the launch on Sunday of US-led military strikes in Afghanistan.
In morning trading the euro was changing hands at $0.9219 compared with $0.9186 on Friday evening in New York and the price of gold rose.
The dollar was going for 119.82 yen compared with 120.50 yen on Friday.
The US and Japanese currency markets are closed on Monday for holidays.
BNP Paribas analyst Hans Redeker said: The market is holding back from pushing the euro higher in this environoment of uncertainties.
The American Congress and President W. Bush warned of the possibility of terrorist reprisals and tried to reassure the Americans about their security in the country and abroad, he said.
Bush annoucned on Sunday the launch of the first military strikes by US and British forces against targets in Afghanistan, less than one month after attacks against the United States on September 11.
Bush said that the strikes were aimed at suspected terrorist training camps of Osama bin Laden, who is thought to have masterminded the attacks against the United States, and military positions of the Taliban, who harbour bin Laden.
Bear Stearns analyst Steve Barrow said that he considered that there were two possible scenarios in currency markets after the beginning of the retaliatory strikes.
He said that the first possibility involved the speed and success of the operation. If completed quickly, the dollar could spike up strongly as stock markets breathe a sigh of relief, he said.
The second scenario involved the likelihood and talk of terrorist reprisals, which could affect the growth environment and be very costly to the dollar, he noted.
Redeker noted that it was unlikely that the euro would appreciate much because, investors have already bought a lot of euros and the liquidity on the market is very weak in general way.
JP Morgan analyst Rebecca Patterson said that the yen could climb against the dollar as investors moved money into currencies considered to be less vulnerable than the dollar because of the US-led military campaign.
However, a strategist at WestLB, Michael Klawitter, said risk aversion in the markets, may even decline as long as military action remains limited and the rifts between the members of the US alliance do not increase.
But in general, none of the main currencies seems to be moving significantly because of the international situation, not even the Swiss franc which has traditionally served as a refuge in times of uncertainty.
An analyst at BNP Paribas said: It would be a mistake to bet on the Swiss franc” noting that the country is under the shock of the death of 14 people killed last month, the collapse of airline Swissair and economic difficulties in general.
The euro was being traded at $0.9219 from $0.9186 on Friday evening in New York, 110.46 yen (110.66), 0.6252 pounds sterling (0.6198) and 1.4790 Swiss francs (1.4846).
The dollar stood at 119.82 yen (120.50) and 1.6043 Swiss francs (1.6159).
The pound was being traded at 1.4744 dollars (1.4823), 176.67 yen (178.61) and 2.3651 Swiss francs (2.3960).
The price of an ounce of gold on the London Bullion Market was rose to $293.15 from $290.20 on Friday.—AFP
