Forex markets have been quiet overnight ahead of long weekend breaks in London and New York. Yesterday's move towards a somewhat firmer euro has been maintained with the single currency peaking at $0.9185, just below the important 92 cents level.

At the opening in New York, the euro is trading at $0.9130, a little above last night's close.


European Central Bank

decision to leave zone interest rates unchanged yesterday is seen as constructive and has added to a modest increase in confidence toward the euro. Traders believe that a hike in euro zone rates is still quite likely in the near term, possibly as early as the June 8 meeting.

"One can't foresee if we've already reached the trend change," said



Ernst Welteke

. The euro's weakness "bothers us every day," he said. He also reintroduced the suggestion of possible ECB market intervention. "One can never exclude intervention."

There seems to be a growing feeling that the euro is finding a base at these levels," said Mitul Kotecha of

Credit Agricole Indosuez

. "The dollar is also becoming more vulnerable and the key was always going to be a dollar fall-off."

Dollar/yen is opening largely unchanged at 107.40. The euro/yen cross is a little firmer at 98.00.

The market's confidence in the yen continues to be damaged by confusing economic data, particularly the possible negative impact of adjustments in the current year GDP reports. Japanese Finance Minister

Kiichi Miyazawa

said today that it would be more difficult to achieve the 0.6% growth target for the 1999/2000 financial year if the understated capital spending decline was corrected in the final data.

Tokyo area consumer prices fell 0.9% in May for the ninth successive year-on-year decline.

Sterling remains under pressure and has remained around yesterday's close at $1.4645. The euro/sterling cross has continued to edge higher to reach 0.6210.

A new element was introduced to the euro/sterling debate today by

European Commission


Romano Prodi

. He suggested that it would be possible for the U.K. to join the euro zone but then to have the option of backing out later, "provided it was done in a way which was not hostile to the

European Union

." This contradicted the established view that no withdrawal option exists for members of the euro zone.

Prodi also expressed sympathy with the problems of U.K. Prime Minister

Tony Blair

in dealing with the euro/sterling impact on trade. "I don't know how you can manage with your strong sterling now," he said.

Dollar/Swiss franc has stayed close to the euro and is opening at 1.7120. The euro/Swiss franc cross is unchanged at 1.5630.

The Canadian dollar has held at its better levels of yesterday's close. Today the U.S. dollar is opening at C$1.5000.

The Australian dollar has moved little overnight and is opening at $0.5700.

Australian Reserve Bank


Ian MacFarlane

is scheduled to make an important speech in London later today. He is expected to indicate that he sees little inflation problem and therefore to reinforce the market's view that interest rate rises in Australia are likely to be limited.

The New Zealand dollar is also opening near Thursday's close at $0.4525.

The South African rand has again eased lower but has stayed within the current range. The currency is opening in New York at 7.18 per dollar.

The rand was hurt today by the re-emergence of concerns over the civil unrest in Zimbabwe following comments by President

Robert Mugabe

. "If other neighboring countries have problems similar to the ones we have encountered, why not apply the same solution as Zimbabwe," he said.