Currencies: U.S. Election Stalemate Keeps Forex Trading Muted

With the stalemate in Florida still dominating the forex market, there has been little exchange rate movement since Friday afternoon. The euro opened marginally lower, at $0.8610. The same two fundamental concerns -- the threat of European Central Bank intervention and the doubt over the U.S. election -- are keeping position-taking to a minimum and trading volumes have been modest.

The dollar has similarly stayed in a narrow range vs. the yen, at 107.70. The euro is softer vs. the yen, opening at 92.75 yen, after hitting 93.10 at the end of last week..

In the vacuum caused by lack of interest in the major currencies, there has been some activity in other areas. Sterling is firmer, at $1.4315. The euro is off from last week's seven-week highs vs. the pound and is now around 60.10 pence. "The main mover is the pound -- in the context of the day, it's the one that's been driving the market," said Roger Hawes of RBS Financial Markets.

The Swiss franc is steady against the dollar, at SF1.7660, a notch firmer vs. the euro, at SF1.5210. There has been some unusual activity in the relationship between the pound and the Swiss franc as both offer trading opportunities outside of the major cross-relationships. "The obvious thing is to buy sterling and sell Swiss francs and maybe the market is a little short of sterling," said Hawes.

Elsewhere the less liquid currencies are still suffering.

The Canadian dollar has slipped even further from Friday's weak close -- at $C1.5425 -- and opened at $C1.5470.

The Australian dollar has dropped sharply, opening at $0.5195.

The New Zealand dollar is also lower, at $0.3945. One bright spot is that the continued weakness of the New Zealand dollar is giving a major boost to export incomes, in the form of higher commodity prices. ANZ bank reported that its U.S. dollar-based commodity price index rose 4.5% in the latest month.

The Polish zloty is soft, at 4.59/dollar, on the back of the weak euro and a growing view that interest rates may have peaked in Poland. Generally positive economic data failed to give the zloty a boost.

The debt crisis in Argentina has been a major concern for many emerging markets currencies in the past week. As expected the International Monetary Fund announced a support package over the weekend and this should return some confidence to the sector. So far, the evidence is inconclusive. The Brazilian real is actually lower today, at 1.958 real/dollar, from 1.953 at Friday's close.