March 26, 2003	Wednesday	Muharram 22, 1424

LONDON, March 25: The dollar fell against the euro and yen on Tuesday but traded within narrow ranges late in the day as investors waited on the sidelines to see how US and British troops fared in their march to Baghdad, analysts said.

The euro rose to 1.0673 dollars in European trading from 1.0636 late on Monday in New York.

The dollar also weakened against the yen to 120.01 from 120.78 on Monday.

“We had the euphoria last week, then the doom and gloom on Monday and now we’re somewhere in the middle,” said Paul Bednarczyk, strategist at 4CAST, referring to recent dollar and stock market movement.

“We’re in tight ranges, with the market continuing to move on whatever the news programmes are saying,” he added.

Investors were loath to take fresh positions until coalition forces reached Baghdad, with their advance hampered on Tuesday by fierce sandstorms and heavy Iraqi resistance 25 kilometres north of the Euphrates River.

Audrey Childe-Freeman, economist at CIBC noted that the entry into Baghdad is not just a crucial turning point for the war, but also for the markets.

“If allies get into the city easily, this will likely shift market psychology to where it stood a week ago (when it anticipated a short, successful war) but if we see a lot of resistance then of course it will be quite a different state of affairs,” she said.

US data released on Tuesday once again had virtually no impact on currencies, with investors remaining solely focussed on Iraq.

The Conference Board’s consumer confidence index fell to 62.5 in March from a revised 64.8 in February, marking its fourth consecutive decline.

The drop in consumer confidence was smaller than expected, with Wall Street analysts forecasting a fall to 62.2 in March.

CIBC’s Childe-Freeman said while data continues to play second fiddle to events in Iraq, the continuing weak trend will not help sentiment in the dollar in the longer term.

Looking ahead, 4CAST’s Bednarczyk believes the market will take some notice on Wednesday when the respected German Ifo economics institute releases its latest survey.

The dollar and yen also traded in a tight range after a plunge late Monday that was sparked by the Bank of Japan’s emergency meeting.

Analysts said so-called yen bears were disappointed by the lack of concrete action, with the meeting leading to no new major steps to fight deflation.

The pound, meanwhile, extended losses against the euro amid fears that a protracted military conflict would hurt the British economy, analysts said.

The euro was changing hands at 1.0673 dollars from 1.0636 late on Friday in New York, 128.11 yen (128.45), 0.6795 pounds (0.6753) and 1.4734 Swiss francs (1.4725).

The dollar was being quoted at 120.01 yen (120.78) and 1.3803 Swiss francs (1.3844).

The pound was at 1.5707 dollars (1.5737), 188.54 yen (190.87) and 2.1684 Swiss francs (2.1786).

On the London Bullion Market, the price of an ounce of gold rose to $331.90 from $329.45 late Monday.—AFP