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Dollar rises 1% vs. euro
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October 22, 1999: 3:36 p.m. ET
Buoyant U.S. stocks bring overseas buyers to dollars; bonds unchanged
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NEW YORK (CNNfn) - The dollar rose to a ten-day high against the euro Friday and reversed most of its earlier losses against the yen as a strengthening U.S stock market drew overseas money into the U.S. currency.
Analysts also said the euro suffered after a tame report on German inflation dampened the likelihood of a European Central Bank interest rate hike. The report, analysts said, signaled that Europe's largest economy may not be recovering as quickly as expected, hurting the driving force behind the euro's recent run-up.
"The report provided an excuse for some (euro) profit taking," said Alex Beuzelin, market analyst at Ruesch International.
Just before 3:15 p.m. ET, it cost $1.0669 to buy one euro, down from $1.0797 Thursday, a 1.19 percent rise in the dollar's value. The dollar, after being significantly weaker against the yen, nearly broke even with the Japanese currency. The U.S currency slipped to 105.99 yen from 106.08 Thursday, a 0.08 percent dip in the dollar's value.
The dollar's gains come as oversees investors move into rising U.S stocks, which must be bought in the U.S. currency. The gains also come from dollar buying by currency traders hoping to profit from this influx of overseas money.
Bonds little changed
Treasury bond prices were little changed Friday as an absence of economic indicators and speeches by Federal Reserve officers lent the market little direction.
Just before 3:15 p.m. ET, the price of the 30-year Treasury bond was unchanged at 96-30/32. Its yield, which moves inversely to the price, fell to 6.35 percent from 6.35 percent Thursday.
Bonds have lost value or been flat nearly every day since Oct. 5, when the Federal Reserve left its main lending rate unchanged at 5.25 percent but signaled concern about rising inflation.
The 30-year bond futures contract hasn't closed higher for two consecutive days since Sept. 23 and 24, according to Tony Crescenzi, bond strategist at Miller Tabak & Co.
Ahead, few analysts expect much upside until the market gets past the Fed's next meeting Nov. 16. Analysts say yields, already at two-year highs, should stay high as long as economic data continue to show strength.
That trend may continue next week with the release of two key economic indicators: the first reading on third-quarter gross domestic product and the third quarter's employment cost index.
"That's going to be our next hurdle," said Michael Boss, bond futures broker at IBJ Lanston Futures.
In an e-mail to clients Friday, Donaldson Lufkin & Jenrette agreed.
"Our GDP estimates (of 5.2 percent growth) have negative connotations for the market," the firm said. "Our total ECI estimate (of 0.8 percent growth) is neutral for the market, though the wage component estimate ( up 0.9 percent) is probably a negative."
DLJ noted that ECI, because it's viewed as forward-looking, tends to have more market impact than GDP, which is historical.
"In addition, the focus on ECI reflects the widely held perception that it is one of Fed Chairman (Alan) Greenspan's favorite indicators," DLJ said.
With unemployment at a 29-year low, Greenspan has cautioned that rising wages could bring on increased inflation. The Fed raised interest rates twice last summer in a bid to pre-empt inflation and slow economic growth. 
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