May 02, 2008	Friday	Rabi-us-Sani 25, 1429

NEW YORK, May 1: The dollar climbed to a five-week peak against the euro and a seven-week high versus a major currency basket on Thursday as data indicated a generally stable economy, suggesting the Federal Reserve’s monetary easing could slow.

Investors focused on the positive aspects of the US spending and core inflation data as well as a key manufacturing survey for April and shrugged off higher-than-expected US initial jobless claims.

“The ISM data shows manufacturing is not deteriorating further and as long as we keep getting status-quo, non-deteriorating numbers the market will buy the dollar.

That’s the psychology of the currency market right now,” said Joseph Trevisani, chief market analyst, at FX Solutions in Saddle River, New Jersey.

The Institute for Supply Management said its index of national factory activity was unchanged in April from March at 48.6, indicating that manufacturing contracted for the third straight month but not as much as economists had expected.

The euro fell to a five-week low against the dollar to $1.5438, according to Reuters data, but traded back up to $1.5457, down one per cent. Traders said markets earlier ran stop-losses in euro/dollar below $1.5490, accelerating the currency’s decline.

Most market participants now expect a lower trading range between $1.52-$1.57 after the euro rose to a record peak above $1.60 last week.

“Nobody can come up with a good reason to buy the euro right now. Euro-zone growth probably won’t return to 2.5 per cent and the ECB is not likely to raise interest rates,” Trevisani said, referring to the European Central Bank.

Against a basket of currencies, the dollar rose nearly one per cent to 73.305, after earlier hitting a peak of 73.328, the highest level since March 11.

—Reuters