July 28, 2002	Sunday	Jamadi-ul-Awwal 17,1423

NEW YORK, July 27: The dollar jumped ahead of the euro on Friday as a surprise upward revision to the University of Michigan index of consumer sentiment brightened the outlook for the US economy.

The single European currency slipped below parity with the greenback to $0.9869 from 1.0048 late on Thursday in New York.

The dollar also rose sharply against the yen, rising to 118.79 yen from 116.40 on Thursday.

Analysts said the greenback was being helped by stability on Wall Street after a massive rally Wednesday — the biggest in 15 years.

The dollar is being buoyed by a rally in equity markets, said Will Rugg, senior currency strategist at Standard and Poor’s.

Equities were already up and the Michigan result gave them an extra kick, Rugg said.

The University of Michigan consumer sentiment index rose to 88.1 in the final July reading from 86.5 in the preliminary reading, market sources said.

The upward revision to the Michigan index helped to bolster confidence, Rugg said.

The dollar’s rise was broad-based, with significant rises against the yen, Swiss franc and sterling.

But many analysts still had doubts about the sustainability of the dollar rally.

While the dollar did rebound, the rebound was, for the most part, for the ‘wrong’ reasons, said Robert Sinche of Citibank.

One of the key factors we highlighted was that it appeared that the sharp, steady downward adjustment to interest rate expectations since late March was complete, suggesting some stability for the dollar

We have suggested consistently that dollar weakness is likely during the summer months of reduced capital flows, and there is little in developments over the last week to change that view.

Elsewhere, market reaction to the Swiss National Bank move to lower its Libor rate by 50 basis points was muted.

The yen continued to look soft after the Nikkei’s sharp fall amid concerns that economic recovery has lost momentum in the wake of Taiwan Semiconductor Manufacturing Co’s downbeat guidance for the third quarter, dealers said.

Sterling was little changed despite a sharp rise in Britain’s second-quarter gross domestic product.

In late New York trade, The dollar was being quoted at 1.4655 Swiss francs from 1.4383 a day earlier.

The pound was at $1.5651 after 1.5842 late on Thursday.—AFP