The euro is again losing ground in early trading. Yesterday's intervention by the European Central Bank failed to give the currency any sustainable boost. Instead, the single currency once again followed its by now well-established cycle of rallying modestly immediately after the intervention but then collapsing to pre-intervention levels. Today, disappointing economic data from Germany have compounded the euro's difficulties.

The euro is now trading at $0.8580, well below last night's New York close at $0.8610. "Essentially, they're fighting a losing battle," said Tony Norfield of

ABN Amro

.

Among the finance ministers praising the ECB's intervention strategy was

International Monetary Fund

Managing Director

Horst Koehler

. Speaking to the

European Parliament

today, Koehler said that the bank, "is doing a good job under difficult circumstances." He forecast that the euro's weakness would be reversed. "It is clear that the euro is undervalued, and this poses problems....This misalignment needs to be corrected," he said.

In the meantime, September's industrial production data from Germany did nothing to help the euro's cause. The report showed a decline of 1.6%, well below the expected slip of 0.4%. In August, output rose 1.0%.

Further damaging the single currency, euro-zone producer prices rose 0.9% in September, for a year-on-year increase of 6.2%. Euro-zone economic sentiment data were somewhat more reassuring, however, with a steady reading of 103.3 in October.

With the dollar enjoying an extended period of strength vs. virtually all other currencies, the forex market is fairly relaxed about the outcome of today's U.S. Presidential election. There is some sense, however, that a

George Bush

victory could be negative for the euro, as he is perceived as less likely to support U.S. participation in any further generalized intervention to boost the single currency.

The yen has remained stable against the dollar and is opening at 107.20, slightly firmer than last night's close. Meanwhile, the euro is weaker against the yen at 92.10, having lost about 0.5% overnight.

Sterling is softer against the dollar at $1.4285 and is steady vs. the euro at 60.10 pence. In a major speech today,

Bank of England

governor

Eddie George

refused to accept that the next move in U.K. interest rates would be downward. He also predicted that the euro would turn around within the next two years.

The Swiss franc is largely tied to the euro at present and is, not surprisingly, opening weaker against the dollar at SF1.7710. The euro has traded quietly against the Swiss franc to open little changed at SF1.5220.

The Canadian dollar has been virtually static. It is opening around the C$1.5295 level.

The Australian dollar is stuck around $0.5260, with local traders cautious about going long the currency, since it has underperformed both the euro and the U.S. dollar in recent weeks.

The New Zealand dollar is at $0.3960, unable to rally beyond $0.4000. The New Zealand currency is being hampered by local retail sales data, which came in weaker than expected.

The Indonesian rupiah remains weak despite the central bank's efforts to support the currency in the face of dollar demand. The rupiah is now trading around 9,225.

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