US dollar dives against the euro (page 2 of 2)

Additionally, North Korean jitters came back to the fore after U.S. administration source said that Pyongyang had told the United States during nuclear talks in Beijing that it has nuclear weapons.

News of a nuclear arsenal in North Korea, a potential threat to Japan's security, did not come as a surprise, but the failure to agree on any significant issue at the talks had weighed on the yen. Next week, market's attention will be on the Bank of Japan's policy board meeting, which is expected to keep the target range for current account deposit unchanged.

Range for the week: 117.00 -122.00

Sterling

Sterling touched a four-year low against the euro and rallied versus the dollar as the Europe's common currency firmed across the board at the beginning of the week.

Speculation about Britain's potential to adopt the euro also weighed on the pound, as the June deadline loomed for Chancellor of the Exchequer Gordon Brown to present his assessment of the country's readiness for the single currency. A report by UK's Financial Times also said that Prime Minster Tony Blair has agreed to rule out an early referendum on British entry to the euro.

Mid week, the U.K. unit trimmed some of its losses after the minutes of the Bank of England's April Policy meeting dimmed expectations of near-term rate cut. The Bank of England's Monetary Policy Committee was split 7-2 in its decision to keep interest rates steady in April, compared with 8-1 vote on March.

MPC members also remarked in the minutes that the weakness of the sterling was one reason for keeping interest rates on hold at 3.75 pct. On the last trading day, the pound was pressured by data that showed the British economy grew at the weakest pace in a year in the first quarter of 2003.

Britain's gross domestic product rose by 0.2 pct in the first quarter, weaker than forecast and half the rate seen in the previous quarter. The figure gives slightly more reason for the Bank of England to reduce its interest rate next month.

Next week, the Confederation of British Industry releases its quarterly industrial trend survey. The report could make gloomy reading with worries over the impact of the war in Iraq and ongoing sluggishness in the global economy.

Range for the week: $ 1.5700 - $ 1.6200.