U.S. TRADE DATA SEEN AS KEY TO DOLLAR TREND
  The dollar's recent signs of stability
  have raised hopes that its 27-month decline may be nearly over,
  but most currency analysts refuse to commit themselves until
  after the June 12 release of U.S. trade data for April.
      "The trade data will be a deciding factor to see if the
  dollar has bottomed out," said Jim McGroarty of Discount Corp.
      Since February 1985, the dollar has nearly halved its value
  against the yen and the mark as part of an officially
  orchestrated campaign to make U.S. goods more competitive on
  world markets and redress gaping world trade imbalances.
      On April 27, the dollar fell to a 40-year low of 137.25 yen
  but has enjoyed a modest recovery over the last few weeks,
  topping 145 yen today for the first time in nearly two months.
      Many economists now believe that the dollar has fallen far
  enough to ease the trade deficit's drag on the U.S. economy.
      The U.S. trade gap narrowed to 13.6 billion dlrs in March
  from 15.1 billion in February and is expected to show continued
  improvement in April in volume, if not in real, terms.
      Keiichi Udagawa of Bank of Tokyo in New York said that if
  further progress is reported, the dollar would head back up
  towards 150 yen.
      "There is growing consensus that the dollar has bottomed
  out for the medium term," added Tom Campbell of First National
  Bank of Chicago.
      Other factors supporting this bullish view were growing
  expectations that Federal Reserve Chairman Paul Volcker would
  be reappointed for a third four-year term in August, Japan's
  larger-than-expected economic stimulus package last week and 
  more favorably technical chart signals, analysts said.
      The dollar was also aided by Japan's moves to dampen
  speculative selling in Tokyo and by reports of active central
  bank intervention to support the dollar.
      The Federal Reserve Bank of New York said last week that
  the U.S. monetary authorities bought more than four billion
  dlrs during the February-April period -- the largest amount
  since the dollar crisis of the late 1970's.
      Discount Corp's McGroarty described the Fed's intervention
  volume as "impressive".
      James O'Neill of Marine Midland Bank was not so positive,
  however: "the dollar has not yet bottomed out. After the trade
  data are released, the dollar could fall towards 1.77 marks and
  140 yen."
      Similarly, Natsuo Okada of Sumitomo Bank in New York
  warned, "I don't think the dollar has bottomed out yet."
      Although the dollar could rise as high as 146.50 yen, Okada
  said market impatience about the painstakingly slow decline of
  the U.S. trade deficit may lead to renewed pressure.
      Currency analysts also warned about an unfavorable reaction
  to the seven-nation economic Summit on June 8 to 10 in Venice,
  which is likely to focus on the implementation of previous
  commitments rather than yield any fresh initiatives.
      President Reagan said today, "economic policy decisions
  made last year in Tokyo and at this year's meetings of Group of
  Seven finance ministers in Paris and Washington cannot be
  ignored or forgotten."
      "The commitments made at these meetings need to be
  translated into action," he added in a speech, celebrating the
  40th anniversary of the Marshall aid plan for Europe.
      Now that Tokyo has unveiled its fiscal stimulus package,
  analysts expected Bonn and the dollar/mark rate to bear the
  brunt of U.S. calls for further action.
      Marine Midland's O'Neill said, "pressure will build up on
  Germany to take stimulative action like Japan."
      Some Japanese bank dealers warned that although the dollar
  could hold above 145 yen for some months it could also come
  under attack again if it seems the latest economic package is
  not having much impact on Japan's economy and its trade
  surplus. Reflecting a longer-term uncertainty, some some trust
  banks and Japanese insurers are keeping their short dollar
  positons hedged against exchange losses in their foreign
  portfolios, while some others have started covering those short
  positions, Japanese bank dealers said.
  

