Further weakness in U.S. equity markets has kept forex investors away from the dollar. However, the euro is not benefiting from this shift in sentiment. Investors are favoring other major currencies as alternatives to the dollar. Overnight the euro slipped, while the yen, sterling and Swiss franc held firmer levels.

"People are freaked out about equities and, on top of that, you've got

the threat of further central bank intervention," said Francesca Fornasari of

Lehman Brothers

. "They are digesting a large amount of information, especially about the stock markets," she added.

The euro is opening 0.5% lower at $0.8645, its lowest level since the

G7

intervention on September 22. Euro-zone

GDP

growth was slightly revised down to 3.7% year-on-year, with a solid second-quarter increase of 0.9%.

The market's disappointment with the dollar is boosting the yen and leaving the euro lagging. The euro/yen cross again moved in favor of the Japanese currency overnight. It is opening around 93.05.

Against the dollar, the yen is trading around last night's closing level of 107.60. Japan's current-account surplus was up 24% in August from the prior year.

Though the Swiss franc gave back some of yesterday's gains, it looks attractive as a safe-haven currency in confused markets. "The one that has benefited is the Swiss franc -- not just against the dollar, but more surprisingly, against the euro," said Fornasari.

The Swiss currency is opening at SF1.7480. On a cross rate basis with the euro, the Swiss franc is close to record highs at SF1.5115.

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Sterling is not far off its best levels at $1.4625 and is hitting five-month highs against the euro. Euro/sterling is now trading at 59.15 pence as the U.K. is seen as a more predictable investment than the euro in a confused market.

A report from the

British Chamber of Commerce

suggests that manufacturing is picking up, with companies anticipating improved sales in the coming months.

The Canadian dollar is again little changed at C$1.5055.

After making solid gains yesterday, the Australian dollar failed to follow through and is back around recent lows at $0.5305. There was a surprisingly weak employment report for September that showed a drop of 30,500 compared with an expected gain of 17,000. The Sydney stock market is also in the doldrums, falling for the seventh straight session on Thursday.

The New Zealand dollar was hit when government regulators blocked a planned takeover of

Fletcher Challenge Energy

by the Anglo/Dutch company

Shell.

Following the surprise news, the New Zealand dollar fell to a new all-time low of $0.3970.

Weakness in emerging markets currencies continues to be a feature of global forex trading. The Polish zloty has fallen by a further 1%, to trade at 4.69/dollar, on disappointment over expected inflows and concerns over the size of the planned fiscal deficit.

Once again the South African rand dropped to new lows. Yesterday saw the currency hit a record low at 7.4025/dollar. Today it has slipped further to 7.43/dollar. Apart from the impact of a weak euro, the rand has been hurt by problems in neighboring Zimbabwe and by a sluggish domestic economy.

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