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DENVER, CO, USA - 12/23/98
SUMMARY
The dollar is steady this morning in light pre-Christmas trade. US final GDP
for the third quarter was released +3.7 percent vs. an estimated +3.9
percent, but the impact has been muted due to light volumes. US durable
goods for November were +1.0 percent vs. +0.4 percent expectation. Talk of
Clinton cutting a deal with the Senate and a generally firm stock market
should support into the holiday weekend. As expected, the FOMC left US
interest rates unchanged yesterday at their final meeting of the year.
EUROPE
Minutes released by the Bank of England's Monetary Policy Committee show the
group voted unanimously for December's 50 b.p. cut in UK rates. However,
one member of the panel of nine was pushing for a more aggressive 75 b.p.
cut. This may herald further cuts in the new year, though the minutes did
not specifically hint at any bias for January. Britain's Office for
National Statistics issued data showing that the UK's total trade deficit
for October stood at 506 million pounds vs. 1.45 billion in September.
Nothing new came from the European Central Bank's final meeting before the
introduction of the Euro. ECB head Wim Duisenberg gave no indication that
rates would be adjusted in the short term.
ASIA
Asian markets are quiet due primarily to a Wednesday holiday in Japan, but
nervousness over government bond quality is weighing on the yen. The
government plans to issue 61 trillion yen ($525 billion) in bonds during
fiscal 1999. The prospect of such a massive debt offering has caused long
term bond yields to rise nearly 60 b.p. in two days to 1.90 percent, more
than doubling their value over the past two months.
NORTH AMERICA
Canadian dollar is still stuck at the low end of its recent range. Energy
and commodity prices continue to weigh on the currency along with concerns
of year end US dollar repatriations from Canada. C$ activity will be very
light as Canada will be closed Friday for Christmas and Monday for Boxing
day. Prospects for the currency are not bright as it heads into the new
year with nearly no supportive factors.
Respectfully,
Richard Chehovin
President Chief Currency Trader
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