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Bonds edge higher
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August 18, 2000: 3:27 p.m. ET
Technical factors lift prices ahead of Fed meeting; dollar climbs vs. euro
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended moderately higher Friday amid light trading volume as favorable technical factors and continued optimism about the Federal Reserve helped buoy prices.
In the currency markets, the dollar advanced against the euro, but was little changed against the yen.
Shortly after 3 p.m. ET, the benchmark 10-year Treasury note rose 7/32 of a point in price to 99-26/32. The yield, which moves inversely to price, fell to 5.77 percent from 5.80 percent Thursday.
The 30-year bond gained 8/32 to 107-29/32, its yield falling to 5.69 percent  from 5.71 percent.
Analysts said the quarterly expiration of September Treasury options at the Chicago Board of Trade triggered buying. The September Treasury bond contract broke through a key resistance level.
But activity was sluggish throughout the day as many market participants opted for the sidelines ahead of Tuesday's Federal Reserve meeting. With recent signs that the economy is slowing, analysts widely expect the central bank to leave short-term interest rates unchanged.
Since June 1999, the Fed has raised rates six times, bringing the federal  funds rate, or overnight bank lending rate, to 6.5 percent.
The latest economic news was shrugged off. The U.S. trade deficit widened to a record $30.6 billion in June from a revised $30.3 billion in May, the Commerce Department reported.
Separately, the University of Michigan's preliminary consumer sentiment index fell to 107.8 in August from 108.3 in the prior month.
Along with the Fed meeting, next week's calendar includes Thursday's U.S. durable goods for July, and revised second-quarter gross domestic product data Friday.
(Click here for a look at Briefing.com's economic calendar.)
Dollar gains vs. euro
The dollar rose sharply against the euro Friday. Analysts attributed the advance to a surprise decision by Morgan Stanley Capital International to re-weight its global capital index in favor of U.S. assets at the expense of those from the euro zone and Japan.
Nevertheless, analysts said lingering expectations that the European  Central Bank will raise rates when it meets on Aug. 31 continued to support the euro.
The dollar is expected to strengthen next week despite expectations that the Fed will be on hold. Allison Montgomery, currency economist at IDEAglobal.com, an analytical research firm, said a hawkish Fed statement regarding a possible tightening before year-end could boost the dollar.
Shortly after 3 p.m. ET, the euro traded at 90.65 cents, down from 91.65, a 1 percent gain in the dollar's value. The dollar was at 108.52 yen compared with 108.62 yen Thursday. 
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