U.S. Market February 09, 2001

The euro had its biggest drop in five weeks against the dollar after slower earnings and sales growth at some of the single-currency zone's biggest companies signaled the economy is cooling. An ECB monthly report noted that euro zone economic growth would remain robust despite dampening impact of sharper-than-anticipated U.S. economic slowdown. ECB reiterated no need to emulate U.S. Federal Reserve interest rate cuts.

G7 finance ministers will ask the United States to prop up consumer confidence and encourage balanced growth when they meet next week in Palermo, a source at the Italian Treasury said on Thursday. G-7 meets next week.

Japanese currency was weighed down by news overnight that Japan's output contracted in the third quarter of last year. Dollar/yen traded around session highs of 116.70 yen. The BOJ is expected to unveil ways of improving liquidity provision this Friday but Japan's economic and stock market woes have provoked talk that the central bank could show itself willing to print more yen or reverse last year's interest rate rise.

Sterling soften throughout the NY session after the BOE lowered its interest rate by 25 basis points. The 1.4410 level was tested in NY on Thursday.

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