$US more stable

Press, 30 January 1984, Page 21

$US more stable

The United States dollar stabilised last week, trading within a relatively narrow range compared with previous weeks, reports the Westpac Banking Corporation’s international information service. The market is still somewhat uncertain about the likely direction of the United States dollar over the next few weeks and the dollar seems likely to continue the range trading of last week. American economic figures released last week have confirmed that there has been a slowdown in the United States economy in December, with fourth quarter G.N.P. up 4.5 per cent, smaller than the 7.6 per cent rise for the previous quarter. Durable goods fell 1.1 per cent against a rise in November of 2.9 per cent. Despite this slowdown, United States interest rates have remained steady, and with the United States Treasury coming to market

early in February with heavy funding requirements, Westpac expects interest rates to remain steady and perhaps firm slightly. This should provide continued support for the United States dollar. The Australian dollar firmed significantly last week, moving from 0.9020 to its current level of 0.9090. Interest rates in Australia have firmed in recent weeks, and with the annual inflation rate down to 8.6 per cent, the Australian dollar should again prove to be attractive to investors. Capital is likely to start flowing into Australia again. “We continue to see a

stronger Australian dollar and consider 0.9200 against the United States dollar a strong possibility in the medium term,” says Westpac. Despite favourable trade figures released last week, sterling is likely to remain vulnerable to any news of lower oil prices and should trade within a narrow range this week of 1.3950 to 1.4150 against the American dollar. The yen should retain its strong undertone, trading between 233.50 and 234.50, while the deutschemark will continue to be the weakest of the major currencies, Westpac says.