The euro is looking a little more robust this morning as it makes gains vs. the yen and the pound. On the other hand, developments in Japan are not supportive of the yen, with consumers still unwilling to increase their contribution to the economy.

The euro is opening today at $0.9105 after yesterday's close at $0.9050. The currency has received strong backing from the


, which is recognized in the forex world as a highly reputable source.



for April was unchanged month-on-month, with annual inflation at 1.3%.

Today the Bundesbank made a strong effort to support the euro in its May report. "Clearly the foreign exchange markets did not sufficiently appreciate the internal strength of the euro." The bank stated that the forex market "is misaligned" and that "such misvaluations are not good."

Attention is now focusing on Thursday's

European Central Bank

meeting and there is now some view that an increase in euro zone interest rates is possible.

Dollar/yen is opening firmer at 107.25 after closing at 106.55.

The euro/yen cross is firmer at 97.70 as the euro edges higher vs. the dollar. The yen has now backed off by 3% from its highs against the euro last week.

Bad news for the Japanese economy came in the announcement that retail sales fell for the 37th straight month in April. On the positive side, the country's trade surplus for April was up 10.3% from a year earlier.

Following up on yesterday's pattern, sterling has eased to $1.4765 after seeing overnight lows of $1.4680. The euro/sterling cross remains very much in the view of the market and is pushing to higher levels around 0.6165.

"It's a general view that the pound is at risk," said Bob Sinche of


. "We switched from short sterling vs. the dollar to a short position vs. the euro. It was the technical team that changed our view." Sinche sees a lot of opportunity in this euro/sterling position. "This is one that could be in place for a long period of time," he said.

Dollar/Swiss franc has remained steady in parallel to the euro and is now at 1.7180. The euro/Swiss franc cross at 1.5645.

Overnight markets have maintained the negative tone in regard to the Canadian dollar have pushed the U.S. dollar to new highs of C$1.5090. The U.S. dollar is currently opening at C$1.5050.

The Australian dollar is significantly lower at $0.5705.

The New Zealand dollar has backed off from yesterday's better levels and is opening at $0.4520. Traders were disappointed by a surprise worsening in New Zealand's trade deficit in April. The data showed a deficit of NZ$86 million, compared with an expected surplus of about NZ$43 million.

As noted yesterday, the South African rand is beginning to show greater signs of stability and has opened little changed at around 7.07. The rand was not helped by April producer prices, which rose 10.1% year-on-year after 8.6% in March.