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DENVER, CO, USA - 12/21/98 -
SUMMARY
The dollar opened mixed this morning in New York trade gaining against the
mark but falling to the yen. The big news over the weekend was the House
vote to impeach President Clinton. Two of the four articles will move to the
Senate where it is doubtful a two-thirds majority will be reached to remove
the President from office. US-Britain air strikes were called off over the
weekend with Iraq stating UNSCOM will never be allowed back into the
country. On Wall Street, stocks opened sharply higher (+1.70%) with the Dow
climbing back over the 9000 level. The 30-year long- bond is down over a
full point yielding 5.068.
ASIA
Japan outlined its largest budget ever for the upcoming fiscal year, which
is another attempt designed to boost the economy out of recession. The
government plans to pay for the budget with 71.13 trillion yen in bonds,
bringing bond issuance to 37.9 percent of budget revenue. Elsewhere, Asian
currencies were little changed with market volume drying ahead of the
holiday. The rupiah is still stuck around the 7500. Indonesian central bank
governor Sjahril Sabirin said he expected interest rates to fall further.
The Korean won began firmer following a four- percent rise in the Korean
stock market. The Thai baht is also firmer helped by news of further sales
by the Financial Sector Restructuring Authority. The Singapore dollar and
the Philippine peso were also on the firm side.
EUROPE
Sterling got a boost after the UK reported its current account surplus hit a
near-record high 2.28 billion pounds in the third quarter. Traders reported
thin market conditions before the Christmas holiday and before the launch of
the euro currency. In Germany, Herbert Hax, chairman of the "Five Wise Men"
council of advisors, expects GDP to grow by less than two percent. Hax said
one of the main factors would be the decline in German exports due to the
global economic crisis.
AMERICAS
The Canadian currency opened weaker against its US counterpart in thin
volume activity. The CAD was on the offer after the release of weaker
consumer spending data. The local currency is expected to remain range-bound
before year-end. In cross trading, the CAD is firmer against the mark and
the yen.
LATIN AMERICA
In Mexico, the peso opened firmer as dealers reported a strong demand for
higher interest rates. In Brazil, the central bank was seen intervening in
the local FX markets on Monday. Currency markets have lost $2.639 billion
month to date. Brazil's reserves now stand at $49 billion according to a
senior official at the Brazilian Central Bank.
Richard Chehovin
President Chief Currency Trader
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