The dollar fell against the euro yesterday after bleak economic indicators in the US strengthened the prospect of an early rate cut by the Federal Reserve chairman, Mr Alan Greenspan.
Consumer confidence slumped in February to its lowest level in more than 4 1/2 years and new homes sales plummeted by 10.9 per cent in January, the biggest drop in seven years.
The Nasdaq hit a new two-year low on weak earnings forecasts. Trintech of Dublin, one of Ireland's new success stories, was badly hit, with its value dropping 30 per cent after it reported a fourth-quarter loss of 12 US cents per American Depositary Receipt.
An early rally on Wall Street went into reverse when the Federal Reserve vice-chairman, Mr Roger Ferguson, said household spending seemed to have held up quite well, dampening expectation of an early rate cut.
Mr Greenspan will address Congress today on the worsening situation, and may nevertheless announce that he will cut the rate before the next scheduled meeting of the Federal Reserve on March 20th.
The consumer confidence index fell for the fifth month to 106.8 from 115.7. Its compiler, Ms Lynn Franco, said it did not signal a recession but a severe economic downturn.
The Federal Reserve cut short-term interest rates by one point in January to 5.5 per cent and is widely expected to cut rates by an additional half percentage point.
JDS Uniphase of Toronto Corp, the world's No 1 supplier of fiber-optic components, said yesterday it would cut 3,000 staff because of a slowdown in the market.