The dollar is gaining on the euro today as growth disparities are reconsidered.

With the recent series of data coming out of Europe indicating inflationary pressures and a slowdown in economic growth -- a similar situation to that of the U.S. a couple months ago, if not quite as severe -- analysts are reconsidering past assumptions. The downturn in the U.S. economy of the past several months caused many to believe that euro zone economic growth would outpace that in the U.S. in the coming months. This has led to a strong upward movement in the value of the euro against the dollar.

"The currency markets are driven by a perception of relative growth outlooks," said Malcolm Barr, senior European economist at

J.P. Morgan Chase

, noting the recent inflationary data out of Germany and France.

The disparity in growth rates is not likely to contract in the short term -- with "the European economy weakening, the

European Central Bank will not cut rates, but on the other side of the pond, the Fed is easing," Barr said. He added that in time, he believes the ECB will get over its "hang-ups on inflation and the numbers will come right."

U.S. Federal Reserve Vice Chairman

Roger Ferguson

said this morning that he foresees a continuing slowdown in domestic growth in the first half of 2001, with a turnaround in the second half of the year.

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Following the comments, the dollar has been making strong gains on the euro, adding to gains made yesterday. The euro was recently trading for $0.9145, down from yesterday's close of $0.9210.

Barr opined that the recent upswing in the dollar vs. the euro will not last, and that in the longer term the euro will reach parity with the dollar, or slightly beyond, but not much farther.

There is little news out of Japan this morning. The yen has recently been driven down by a series of comments by officials asserting possibly acceptable levels of yen weakness. The yen was gaining on the dollar this morning, on beliefs that a softer slowdown in the U.S. could help to ease some of Japan's own economic problems, according to



The dollar was most recently trading for 117.14 yen, down from yesterday's close of 117.82 yen.

The slight drop in the euro against the yen today is a "residual of all this," said Barr, referring to the shift in beliefs about the U.S. and European economies. The euro was recently trading at 107.08 yen, down from a close of 108.50 yesterday.

Elsewhere, the dollar is making gains. The British pound, likely brought down by the day's weakness in the euro against the dollar, was recently trading at $1.4507, down from $1.4537 at the close of trading yesterday. The Canadian dollar is also slipping against the U.S. currency, as the U.S. dollar was most recently at C$1.5151, up from a close Wednesday of C$1.5122.

The Australian dollar is rising slightly against the U.S currency today. The Aussie buck was recently at $0.5433, up just marginally from yesterday's close of $0.5427.

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