January 4, 2003	Saturday	Shawwal 30, 1423

LONDON, Jan 3: The dollar retreated against the euro and yen on Friday, ceding some of its strong gains seen a day earlier as a rally sparked by better-than-expected US manufacturing data petered out.

The single European currency rose to $1.0392 from 1.0358 late on Thursday in New York.

The dollar fell to 119.75 yen against 120.07 on Thursday.

Dealers were mulling the outlook for the US economy in light of better-than-expected data published Thursday by the US Institute for Supply Management (ISM) indicating that the manufacturing sector expanded in December.

HSBC currency strategist Mark Austin said the dollar was staging a partial reversal of the big jump seen a day earlier in response to the data.

Over the next few weeks or so we could easily see further recovery in the dollar depending on what happens in the economic data, he said.

Some analysts were also sceptical about the new-found optimism over the outlook for the US economy, noting that recent data had shown the US consumer to be in less fine fettle.

It is amazing — and quite worrying — how a surprisingly strong ISM survey has changed the US economic outlook according to some papers this morning, and while two days ago it was all about doom and gloom, the recovery scenario is now back in vogue, said Audrey Childe-Freeman, economist at Canadian Imperial Bank of Commerce.

The bottom line is that (Thursday’s) survey may have been encouraging — especially after the highly disappointing numbers released in the past few days — but we can never get too carried away from a one-month figure, and the sustainability of the surge in the new orders index has to be questioned, she added.

The euro was changing hands at $1.0392 from 1.0358 late on Thursday in New York, 124.38 yen (124.39), 0.6505 pounds (0.6495) and 1.4545 Swiss francs (1.4531).

The dollar was being quoted at 119.75 yen (120.07), and 1.4045 Swiss francs (1.4026).

The pound was at 1.5918 dollars (1.5938), 191.13 yen (191.44) and 2.2360 Swiss francs (2.2358).

On the London Bullion Market, the price of an ounce of gold rose to $344.85 from $342.20 on Thursday.

SINGAPORE: The dollar eased in quiet trading in Singapore Friday after gains in European and US trade, with sentiment dominated by the threat of a US-led war against Iraq, dealers said.

The dollar traded at 119.93 yen in Singapore against 120.04 in New York. The Tokyo market was closed for New Year holidays.

The dollar rose strongly in US trading as sentiment was boosted by the stronger-than-expected rise in December US supply management data, but this dissipated through the morning in Singapore.

The euro can move a lot lower and test 1.025, he said.

In early afternoon trade, the dollar was up at 1,195.09 South Korean won from 1,190.20 on Thursday, 1.74315 Singapore dollars from 1.7427, 53.5600 Philippine pesos from 53.535 and 34.8099 Taiwan dollars from 34.7715.

It was down at 43.035 Thai baht from 43.19, and 8,915 Indonesian rupiah from 8,945. —AFP