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Dollar, bonds show little movement
Greenback weakens slightly against rivals, while Treasuries mixed ahead of fresh supply, key data.
January 24, 2005: 4:24 PM EST

NEW YORK (CNN/Money) - The dollar showed little change on Monday, while the bond prices traded mixed as the market geared up for a fresh batch of data and the latest serving of supply from the Treasury.

The dollar bought ¥102.65 on Monday, down from ¥102.73 late Friday. The euro bought $1.3056, up slightly from $1.3050 late Friday.

The benchmark 10-year note rose 4/32 of a point at 100-31/32 to yield 4.13 percent, down from last Friday's 4.15 percent. The 30-year bond gained 20/32 of a point to 111-17/32 to yield 4.61 percent, down from 4.65 percent Friday. Bond prices and yields move in opposite directions.

The two-year note lost 2/32 of a point to 99-20/32, yielding 3.20 percent, while the five-year note fell 2/32 of a point to trade at 99-27/32, yielding 3.66 percent.

Comments from Atlanta Federal Reserve President Jack Guynn did little to alter market expectations for a sustained dose of moderate interest rate hikes, at least in the first half of the year.

"In an environment of slower growth, steady job creation, weaker productivity gains, and modestly rising inflation that we envision for 2005, the FOMC will continue to lift its target federal funds rate," Steven Wood, chief economist at Insight Economics, told Reuters.

"Based on our forecast we believe the baseline case is for the FOMC to increase short-term interest rates by 25 basis points at each of the next four meetings," he added.

For his part, Guynn said merely that the Fed's efforts to tighten monetary policy should prevent a major build-up in inflation, a view that broadly mirrored the market's consensus on price pressures.

Consumers also appeared sanguine on the issue, with the University of Michigan's latest survey showing households anticipate a 2.75 percent annual rise in prices during the next five to 10 years.

With no economic data due until later this week, the market was left to drift in its usual pattern so far this month, with longer-dated debt climbing and shorter maturities retreating. The split led to a renewed flattening of the yield curve.

Treasury will also auction $8 billion of 20-year inflation protected notes, known as TIPS, on Tuesday followed by the two-year sale on Wednesday. Traders expect good demand for the issue, since longer-dated maturities have been in favor in recent weeks.

Data scheduled for release later this week include homes sales, consumer confidence and durable goods orders, as well as the first reading of fourth-quarter gross domestic product on Friday. The economy is thought to have grown 3.5 percent annualized last quarter, though forecasts range from 2.8 percent to 4.1 percent.  Top of page

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