The forex market was still in a holding pattern as traders awaited further clarification of the electoral deadlock in Florida.

There was little new information overnight on the presidential recounts. "It's not doing the dollar any favors," said Ian Stannard of

Chase

. "At this stage, the U.S. election just continues to drag on."

Of almost equal concern is the ongoing threat of direct intervention by the

European Central Bank

if the euro comes under serious selling pressure. This morning,

Eddie George

, governor of the

Bank of England

, reiterated that the

G7

group of leading economies had not ruled out the possibility of further action to support the euro.

Those two issues have kept currency trading muted since the end of last week, and there is every likelihood that the market will stay nervous until further substantive information is available. The choppy performance of U.S. equity markets in recent days is yet another reason for currency traders to be confused.

The euro is trading at the lower end of its current range, at $0.8585. "Overall, I'm still pretty positive on the euro," Stannard said. "The pullback from the highs has been corrective; I'm looking for the euro to hold around these levels and then to move up."

The yen has faced a number of economic problems this year, and today, a political concern was thrown into the mix. Prime Minister

Yoshiro Mori

has been challenged by a rival from his own party,

Koichi Kato

. Kato wants to replace Mori as leader. The prime minister already faces a "no confidence" motion later this month from opposition parties. Not surprisingly, the yen softened on this development and was lower overnight at 107.90, a half-yen below the New York close.

Sterling was the major gainer yesterday but had slipped back today. The pound was opening lower at $1.4315, as U.K. inflation for October came in below expectation -- at a 2% year-on-year increase from September's 2.2%.

A separate survey indicated that U.K. manufacturers were more optimistic about the future, but had tight profit margins now. The data reinforce the view that no further interest rate hikes are likely soon. The euro was modestly firmer vs. the pound and was opening around 59.95 pence.

The Swiss franc was lower against the dollar at SF1.7695 and was unchanged vs. the euro at SF1.5195.

The Canadian dollar has come back from the worst levels seen yesterday but remained rather soft at C$1.5435.

The Australian dollar was unchanged at $0.5205. Australian Treasurer

Peter Costello

said he expected the Aussie to do better in future. "In the long term, the currency will reflect the fundamentals, and the fundamentals are good," he said in a public lecture. The New Zealand dollar was a fraction firmer at $0.3975.

As noted yesterday, the

International Monetary Fund's

financing package for Argentina has helped to stabilize emerging markets' currencies. Today, both the Polish zloty and the South African rand were modestly higher. The Brazilian real, which has been under pressure, was also firmer, at 1.946/dollar after closing yesterday at 1.953.

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