Currencies
The euro finally pushed the yen from center stage but thanks to weakening European growth and the likelihood that the ECB will not lower interest rates further. The end result is the euro plummeted to levels not seen for six months. Expectations for a U.S. rebound climbed after Federal Reserve Chairman Alan Greenspan said the economy is showing signs of recovery, remarks that helped fueled the euro sell-off. The dollar posted its biggest weekly gain against the euro in 10 months. The euro, down 2.5 percent so far this month, has declined each January since its 1999 New Year debut.

The dollar rallied against British pound on growing confidence the U.S. economy will recover from recession in coming months. It was the dollar's biggest gain in almost four months against the pound. The dollar gained against both the yen and the euro for the third week.

The yen continued its slide in the week pushed down by signals that the U.S. administration will not block Japan's efforts to weaken its currency. Analysts reached that conclusion after Treasury Secretary Paul O'Neill did not condemn Japan for weakening the yen, saying only that weakening the currency would not solve Japan's economic problems. Other yen negatives include continuing concerns over Japanese banks as well as weakness in the bond market, which has been draining the nation's capital and adding to deflation. Because of the government's plan to abolish its guarantee on time deposits, some depositors are already withdrawing funds from banks. This is prompting fear that weaker banks may face runs in coming weeks, an outcome which would pressure the yen further.

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