There's some variation in the forex market daily schedule at last. For the first time in a few days, the euro has


fallen to new lows in European trading. But the relief is limited, as the single currency is still trading around $0.8515, not far above yesterday's record low of $0.8435.

Markets are concerned over the longer-term implications of the current run-up in oil prices and its already visible effect on asset prices around the world. There is also caution ahead of this weekend's


meeting in Prague. "The market is cautious going into the G7 meeting, but not at all confident that anything will occur," said Stephen Lewis of

Monument Derivatives

in London.

Adding to the uncertainty is next week's Danish referendum on joining the euro zone. Analysts are suggesting that the "no" vote will win as the latest opinion poll shows a 47% to 40% majority in favor of rejecting membership. Lewis sees further problems for the euro if the Danes vote that way on Sept. 28. "If there is a backlash, it makes sense to see how the euro deals with it before any intervention," he said.

There was some good news for the euro. The economy of the euro zone is expected to expand by 3.5% this year and by 3.1% next year. "The euro-area economy is experiencing a strong and robust recovery," said European Monetary Affairs Commissioner

Pedro Solbes


Dollar/yen is opening lower at 106.45. The euro's modest gains have bolstered the euro/yen cross-rate, which is opening at 90.70, well above last night's close at 90.00.

Bad news for the yen came in the announcement of the

Ministry of Trade and Industry's

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index of output for July. Industrial activity fell by 1%, suggesting that third-quarter


growth may be lagging.

Sterling is firmer against the dollar at $1.4185. The euro is unchanged vs. the pound. Sterling was modestly helped by a

Confederation of British Industry

survey, which showed an improvement in the level of orders. The survey also indicated that manufacturers expect prices to ease further.

Dollar/Swiss franc is weaker at 1.7730. The euro hit another record low vs. the Swiss franc yesterday, but is steady this morning at SF1.5100. Swiss

industrial output

rose 8.2% in the second quarter from a year ago. Export sales were up by 12.4%.

The Canadian dollar is little changed at C$1.4860.

Like the euro, the Australian dollar has touched successive record lows in the last few days. Today, the Aussie is holding above the lows at $0.5395. However, a modest gain for the Australian dollar has not helped the NZ dollar, and the Kiwi is lower at $0.4030.

The South African rand closed yesterday in New York at a new record low of 7.33/dollar. Today, the sell-off continues with the rand making another new low at 7.375. The rand has lost 20 cents to the dollar in the past week.

The Polish zloty remains around recent lows at 4.61/dollar as


growth came in slightly below expectations.

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