Currencies: Dollar Steadies After Stock Market's Strong Tuesday

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After strong two-way movement in the last couple of trading days, the dollar has now steadied in the middle of recent ranges. The U.S. currency has derived support from yesterday's very positive performance of the equities markets.

The euro opened at $0.9300, virtually unchanged from last night's close.

"I'm more skeptical than optimistic," said Derek Halpenny of

Bank of Tokyo Mitsubishi

. "The move up was in unusual conditions and you have got to question the reason. People are pricing in

Fed policy too early and economic data are still very strong," he said. Halpenny is in the group of currency strategists that expects further euro weakness before any long-term rally. "I would not be surprised to see it grind back down again," he commented.

The euro zone March trade surplus was up sharply from February but down from March 1999.

Bank of France


Jean-Claude Trichet

said that European central bankers would ensure the conditions for long-term, low inflation growth in the euro zone. "Vigilance will ensure that this rate of growth is sustainable," he said.

With opinion polls in Denmark indicating a "no" vote in September's referendum, the Danish crown has fallen to a record low level of Dkr7.463 per euro.

Dollar/yen is opening somewhat firmer at 107.40. The euro/yen cross has edged higher to 99.90.

The yen was hurt by the collapse of

Daihyaku Mutual Life Insurance Company

which was seen as lowering the likelihood of an imminent interest rate rise.

On the other hand,

Bank of Japan

policy board member Teizo Taya indicated that the BOJ may end its zero interest rate policy before a recovery in personal consumption is fully confirmed. "Once we see the prospects of a recovery from several angles the current policy can be ended," he said.

Sterling is modestly lower $1.4940. The euro/sterling cross has edged higher to 0.6225.

Bank of England

governor Eddie George said today that the recent rise in the euro would, "normalize the situation" for the U.K. He was bullish about the outlook for the euro zone, "The prospects for the euro zone are very good," he said.

Dollar/Swiss franc has remained unchanged and opened at 1.6885. The euro/Swiss franc cross is also about unchanged, at 1.5720.

The Canadian dollar remains on the sidelines and is opened a little weaker, at $1.5030.

The Australian dollar has lost ground and is trading around $0.5720. Economic data continue to disappoint and analysts see little chance that the

Reserve Bank

will match any Fed rate increase in the U.S.

The New Zealand dollar has also moved lower at $0.4575. The May business confidence survey from the

National Bank of New Zealand

showed its largest ever monthly decline.

The South African rand is again firm at 6.98. Traders see the rand as likely to strengthen further in the near term.