The net aftermath of last week’s currency market turned out to be still dollar positive despite the disappointing US second-quarter gross domestic product (GPD). US GDP expanded at a rate of 3.0 % compared to an upward revision of 4.5 % in the early part of the year. However, on Friday, dollar bulls viewed the latest batch of U.S economic indicators as being somewhat positive and they are looking forward for the non-farm payroll reports of this coming week. Indeed the Chicago management index, which shed views on the performance of Midwest business activities, bounced to 59.0 in July from 56.4 in June. On Monday the dollar eased down a notch as the United States issued a warning that Al Qaeda might be attacking key buildings including the New York Stock Exchange, the World Bank, and the International Monetary Fund. Consequently, the dollar fell against the Swiss Franc, a currency much preferred by investors in times of geopolitical concerns. The dollar was traded on Monday at 1.2739 compared to 1.2820 in late Friday US trading sessions. In the week to come traders will be watching whether long-term investors will continue to buy the dollar. In addition, dollar bulls will want to know whether the optimistic comments of Greenspan on the slowdown of the US economy are adequate.

<B>Rise of the sterling</B>

Against the Mauritian rupee, the dollar was offered yesterday at 28.61 against 28.55 a week earlier.

The pound steadied itself for the most part of the week. On Monday the sterling rose more than a cent when compared to the dollar after a survey showed that UK manufacturing sector performed better than it has been doing for the past decade. The Chartered Institute of Purchasing and Supply purchasing managers’ index shot up to 56.3 from an upwardly revised 55.0 in June. In addition, many investors are expecting the bank of England to hike up interest rate by 25 basis points to 4.75 % on Thursday. Consequently, the dealers will be analyzing this week data more to find any clues of monetary tightening.

Against the Mauritian rupee, the pound was offered yesterday at 52.27 against 52.59 a week earlier.

The Japanese yen versus the greenback is more likely to be influenced by the degree to which foreign liquidation of equity positions can be offset by Japanese exporters selling into rallies prior to the vacationing month of August.

Against the Mauritian rupee, the yen was offered yesterday at 25.89 against 26.02 a week earlier.

Major events-data

Wednesday 04 US Mortgage Indx

Thursday 05 GB BoE rate,

Mfg Prod mm, US Jobless Clms

Friday 06 US Unemployment

Monday 09 GB PPI

Tuesday 10 US Retail yy

<B>Contribution by HSBC</B>