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Currencies: Dollar Weaker, Euro Stronger on Comments; CPI Little Noted

Richmond Fed President Broaddus makes negative comments on the strong dollar. Rumors say ECB President Duisenberg could be out.
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Yesterday, further softness in U.S. equity markets gave the euro a chance to move away from its lows and this move has been maintained overnight. Alfred Broaddus, president of the Federal Reserve Bank of Richmond, Va., added further pressure to the dollar in a speech last night, saying the strong dollar had harmed manufacturing in the U.S.

Supporting the euro were comments from

Bundesbank

President

Ernst Welteke

. "The

European Central Bank

and its partners continue to monitor closely the evolution of the euro's external value," he said in an interview in a French newspaper.

Markets around the world have been waiting for today's

Consumer Price Index

(

definition |

chart |

source

) for September. "We're waiting for the CPI and expect it to be in line with price data from other countries -- a dramatic pickup," said David Page of

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Investec Bank

before the announcement.

CPI came in at a gain of 0.5%, after a decline of 0.1% in August, and matched the forex market's expectations. The core rate, excluding volatile food and energy prices, edged up 0.3%. Following the number, the dollar was little impacted, to open at $0.8525.

The yen has edged lower to 108.10 from last night's close at 108.00. The euro/yen cross is little changed at 92.35.

Dollar/Swiss weakened yesterday and is opening a little higher today on rumors that ECB President

Wim Duisenberg

may be asked to resign at tomorrow's meeting. Duisenberg caused confusion earlier this week by suggesting that the ECB was not interested in intervening to support the euro if the currency came under short term pressure. The Swiss franc is trading at SF1.7685 and is slightly lower vs. the euro at SF1.5180.

The pound has largely stayed in line with the euro and is opening at $1.4505. U.K. bond markets rallied this morning on publication of the latest

Monetary Policy Committee

minutes, which showed a 9-0 vote at the last interest rate meeting in favor of leaving rates unchanged. This was a far stronger decision than had been expected and suggested that no rate rise is likely soon. "Bond and gilt markets rallied as it seems to suggest a peak in the interest rate cycle," said Page. "However, we think there is another rise in the pipeline -- maybe early next year."

Euro/sterling is relatively unchanged at $0.5875, with the pound and euro running in tandem.

The Canadian dollar touched a new low for the year yesterday at C$1.5235 before recovering fractionally at the close. This morning the currency is trading at C$1.5175.

The Australian dollar has enjoyed a modest respite overnight after days of selling pressure and is opening at $0.5215, half a cent above yesterday's record low at $0.5165.

The New Zealand dollar is also marginally higher at $0.3950.

After gaining yesterday, the Philippine peso has fallen again -- for the seventh time in eight days -- with signs of a slow down in manufacturing. An impeachment motion against President Estrada also created political unrest. The peso is now valued at 48.5/dollar.

The South African rand has just fallen to a new record low at 7.67/dollar, on reports of a bomb incident.