August 27, 2002	Tuesday	Jamadi-us-Saani 17,1423

LONDON, Aug 26: The dollar kept close to the previous week’s two-week highs against the euro and the yen in holiday-thinned trading on Monday, stabilising ahead of key data this week from the US, Japan and Europe.

Key indices on Wall Street fell at least two per cent on Friday, but still ended the week higher, and stock index futures were indicating a stronger open on Monday. The dollar’s fortunes have closely mirrored those of US stocks in recent months.

People will not want to make massive directional bids in this environment.

Markets in London were shut due to a summer bank holiday.

The dollar was trading around $0.97 per euro, a quarter percent above late New York levels, and close to two-week highs of $0.9664 set on Friday.

Against the yen it was half a yen below Friday’s two-week high, trading at 119.76/79 yen.

Analysts said the narrowing of credit spreads between US Treasuries and corporate bonds was a positive sign for the economic outlook.

But Tuesday’s durable goods, a key gauge of capital spending, are set to rise 1.2 per cent in July after a 4.1 per cent drop in June.

After the disappointment in durable goods last month, if the figures are higher this time, that could boost equities and therefore the dollar, said Niels Christensen, currency strategist at Societe Generale in Paris.

Consumer confidence is seen almost steady at 97.0 from 97.1 a month earlier. The confidence report is due on Tuesday.

Friday brings the Chicago Purchasing Management Index report, a measure of manufacturing in the US mid-west region, which is expected to show an improvement.

Elsewhere, the euro zone releases the Ifo index, a measure of German business sentiment, on Wednesday. The index is expected to show a fall to 89.0 in August from 89.9 in the previous month, showing how European economies are coping with the tumbles in their share markets.

The issue of euro zone members’ ability to meet deficit targets re-emerged on Monday after French Prime Minister Jean-Pierre Raffarin said he was unsure France would hit the three percent growth target for next year that his government has made a condition for fulfilling a key budget deficit-reduction target.

Doubts about the success of European economic and monetary union dogged the euro in its first few years of trading, but analysts said these concerns had had less influence on the single currency in recent months.

The Danish crown, meanwhile, hit a record high against the euro near 7.4250. Traders in Denmark said the central bank was seen buying euros for crowns around this level.

Denmark is not a member of the euro zone, but its currency trades in a narrow band and can only fluctuate by 2.25 per cent either side of a central parity rate of 7.46038.—Reuters