U.S. Market January 19, 2001

A dramatic increase in volatility whipsawed the currency markets today in New York trading as the Philadelphia Federal Reserve Bank's survey of manufacturing activity in the mid-Atlantic region declined to its lowest level in the past decade. The usd, which only yesterday had been bolstered by Treasury Secretary designate Paul O’Neil’s clearly voiced support of a strong dollar and relatively low inflation numbers, went into a tailspin against three of the four major trading currencies: the euro, the yen and the Swiss Franc. The usd/yen closed near 118.00, off the lows but considerably below the 1 ˝ year high attained last night. The euro ended the day at 0.9420, also off the peak, but up almost 0.75 % from the previous American close; and the usd/chf concluded the day near 1.6200 slipping over 1.5% from yesterday. With the next Federal Reserve barely two weeks away, each piece of economic data assumes exaggerated importance and each variation from the expected numbers feeds volatility. The market can anticipate more of these wild swings as traders attempt to divine both the intentions of the Mr. Greenspan and the actual state of the American economy.

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