October 27, 2002	Sunday	Sha’aban 20,1423

NEW YORK, Oct 26: The dollar did not benefit from Friday’s stock market rally that clinched a third week of gains for US equities but the greenback also did not suffer from worse than expected US consumer sentiment or durable goods data.

Currency markets maintained their tight trading ranges as investors grappled with lackluster global economic growth, uncertainty about Japan’s banking reform process and a possible unwinding of Europe’s growth and stability pact, which underpins Europe’s coordinated economy.

The links between the equity markets and the dollar appear a little more muted. While we still think the links are there, over the past two weeks the Dow’s significant rally has also not had a lot of damage on the euro, said David Mozina, director of foreign exchange and fixed income research at Bank of America in New York.

The mixed bag of US data did little to change the widespread view that the United States is recovering gradually, and gave traders no impetus to take the dollar outside the roughly 96.50-99.50 cents per euro range that it has been trading in for about three months, dealers said.

The US economic data showed September durable goods falling 5.9 per cent, more than the 1.8 per cent decline economists expected.

Adding to the gloomy news was the University of Michigan’s final look at US consumer sentiment for October which dropped for the the fifth straight month to a nine-year low of 80.6 from September’s 86.1 reading and below forecasts of 81.1.

However, sales of new US homes last month set a record while existing home sales rose at a robust rate, representing a consistent area of strength for the US economy.

The housing data helped stem the dollar’s losses which came in some part from the weak consumer and durable goods data.

On Friday, the euro traded in a narrow range, from a high of 97.94 cents to a low of 97.54 cents. In late New York action, the euro bought 97.60 cents, off just 0.18 per cent.

The dollar lost ground against the yen, trading at 124.28 yen, off 0.10 per cent on the day but near the top of the day’s range of 124.66 yen. The dollar hit a two-week low of 123.60 yen.

There’s some liquidation of short-yen positions going on, the yen is very oversold, said John Hazelton, director of forex at PNC Bank in Pittsburgh.

The yen remained broadly firmer against the dollar and the euro, as investors covered short-yen positions ahead of a report due next Wednesday on measures to clean up Japanese banks’ bad loans.—Reuters