Currencies: Dollar Slips on Talk of Euro Intervention

By Dan Bernstein ,

A lot of little stories are combining today to make up a larger story of the dollar slipping in value nearly across the board.

The euro story was about intervention jitters, as traders' talk about a possible

European Central Bank

move to support the single currency was being heard. "Since we are near the territory where

the ECB came in before, people are haunted by that," said Lisa Finstrom, the senior currency analyst at

Salomon Smith Barney

.

Wary of a supported euro, traders are covering short positions -- or bets that euro will fall -- thus pushing up the value of the currency. The euro traded most recently for $0.8480, up a half-cent from yesterday's close of $0.8430. The ECB intervened multiple times last fall when the euro was trading within the 84 cent to 86 cent range.

The euro remains range-bound, due to what Finstrom called a "mixed picture" -- the U.S. economic slowdown, which normally could help the euro but isn't in the face of Europe's own fiscal turmoil.

"There's not much new to talk about," Findstrom said about the British pound. The markets are "rehashing the same-old same-old," she said. Last week's

Labour Party

victory had put massive pressure on the pound, pushing it down to 15-year lows against the dollar. The move down was due to concerns that the party may push for merging the pound with the single-currency euro sooner rather than later.

The pound traded for $1.3765 recently, barely up from where it closed trading yesterday, at $1.3725.

The pound has been unable to pull itself far off those lows, and it actually set fresh 15-year lows this morning. The sterling wasn't helped any by this morning's release of U.K. retail price data. The numbers were much stronger than expected, which "sort of downplays the odds of the

Bank of England easing," the analyst said.

The yen was making no news of its own, but playing off the actions of the other major currencies. The euro's push higher against the dollar was seen in yen trading, as the euro climbed to 103.25 yen per euro, up from yesterday's close of 102.74 yen per euro. The dollar fell to the yen, pricing recently for 121.69 yen per dollar, down from 121.91 at last close.

The Canadian dollar slipped against its U.S. counterpart this morning for the first time in a week, as it appeared that worries over economic growth had finally hit home. Still, Finstrom felt the move down was more due to short-covering than anything else. The U.S. dollar rose to C$1.5256 this morning, from C$1.5190 at yesterday's close.

The Australian dollar remained quiet this morning, gaining slightly on the U.S. currency to $0.5246, from $0.5215 at last close.

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