After yesterday's volatile session, the forex market has, so far, held to much narrower ranges this morning. However nothing can be taken for granted as the two issues which roiled the market are still very much in play.

The

European Central Bank

-- aided by other central banks in the euro zone -- intervened in the market for the fifth time in six weeks yesterday and is clearly monitoring the gyrations of the euro on an hour-by-hour basis. This threat should keep the euro modestly supported and the ECB is likely to show itself if any threatening sell-off seems to be developing.

The electoral confusion in Florida is not getting any clearer and it now seems that uncertainty over the next president may go on for days or even weeks. This factor is causing disruption in all markets and further volatility seems certain. The forex market is relatively immune to this issue as the dollar's fundamental strength is not in question, however stock market fluctuations do feed across to currency markets and there is every likelihood of continuing erratic moves in the equity indexes.

"There is a lot of uncertainty about the election and that is not going to help the dollar," said Robert Lynch of

Paribas.

Overnight, the euro has traded as high as $0.8705 and is now opening somewhat lower, at $0.8665. Following yesterday's intervention,

European Monetary Affairs

Commissioner, Pedro Solbes indicated that the euro has plenty of room to move higher. "In our opinion the euro is undervalued between 20% and 25%," he said to a conference in Spain.

Dollar/yen has been more active in the past 24 hours and is now trading at its best near-term levels around 107.70.

The yen's strength has been hampered by the weak outlook fro the Japanese economy. This was emphasized by today's cautious assessment from the

Economic Planning Agency

. "We have not changed our assessment that a moderate recovery continues -- we just have a sense of caution which is more psychological than backed up by hard data," said EPA head Taichi Sakaiya in a press conference.

"The EPA downgraded its assessment of the economy for the first time in two years and that, combined with the prospect of euro/yen intervention," will keep the currency in a tight range, said Lynch.

The euro has made even more headway against the yen and opened higher, around 93.30.

Sterling is pretty much on the sidelines as euro/dollar bounces around and opened modestly lower, at $1.4300. The euro is unchanged against the pound, at 60.55 pence.

The Swiss franc is stronger against the dollar at SF1.7570. It is weaker vs. the euro, at SF1.5225.

In a news conference yesterday, the Governor of the

Bank of Canada

, Gordon Thiessen indicated that he expected the U.S. dollar to weaken and that the Canadian dollar would benefit in response. "I'd certainly be happy if the Canadian dollar were stronger," he commented. So far he's not getting his wish as the Canadian currency is still very weak, at $C1.5475, having almost touched $C1.55 in earlier trading. Traders generally expect further weakness in the coming days.

The Australian dollar is slipping lower, at $0.5260, and the New Zealand dollar has lost ground, to $0.3980.

Yesterday, the South African rand dropped to a new record low of 7.765/dollar, on rumors -- later denied -- that the Minister of Finance, Trevor Manuel, planned to resign. Today, there has been some rand buying as the rumors lose impact. In addition, a stronger euro has helped to push the currency to better levels, at 7.60.

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