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In recent days, the euro has begun looking a little better placed to hold its own against the dollar and other currencies. The single currency moved higher overnight and is opening at $0.8630, up from last night's New York close at $0.8615.

Is this just another false dawn for the euro or have fundamentals shifted in favor of the single currency? The forex market is looking to U.S. economic data due in the balance of the week to make this assessment.

In the meantime, today's European economic data did nothing to boost the euro. The euro-zone

Purchasing Managers' Index

for October slipped to a 9-month low of 55.7 from 57.2 in September.

As expected, the

European Central Bank

left its interest rates unchanged at 4.75% at today's meeting. (

wrote about the ECB meeting in a separate


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"It's a euro rally on external news -- I'd be more convinced if it was driven by internal European data," said Mark Henry of

GNI Financial

in London.

Henry doubts that the euro is beginning a long-term recovery. In his view, the currency will likely run out of steam. "It's one of those moves we see once in a while, and thin conditions have played a role," said Henry. "We would still feel that people will start to sell into the rally," he added.

The dollar has edged higher against the largely directionless Japanese yen and is opening around 108.30. The euro has made further progress vs. the Japanese currency and is trading 50 points higher at 93.50 yen.

Sterling continues on the sidelines against the dollar and is opening at $1.4515. The pound is now consistently losing ground to the stronger euro, which is opening at 59.40 pence.

Dollar/Swiss has fallen back sharply as the dollar loses ground to European currencies. Last week the market saw a high of SF1.8300, now the dollar is valued at SF1.7715, a 3% pullback. In Swiss franc terms, the euro has lost some ground overnight to open at SF1.5290.

The Canadian dollar has been on a real roller-coaster ride over the past few days. After appearing to stage a recovery yesterday morning, the currency has now fallen sharply to new lows at C$1.5360, a slide of about 1%. The problem seems to be that capital flows are not making their way to smaller currencies like the Canadian dollar, even though the U.S. dollar is losing some of its appeal.

In line with this view, the Australian and New Zealand dollars have also been unable to take advantage of the euro's recovery and are only modestly firmer. The Australian dollar has edged up 40 points to $0.5280 and the New Zealand currency is higher by about the same amount at $0.4000.

The Polish zloty, which is tied to the euro, has gained about 1.5% against the dollar in the past two days to open at 4.57/dollar.

Similarly the South African rand is at a three-week high vs. the dollar, at 7.48.

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