President Romano Prodi has said that combined intervention by the U.S., Japan and Europe in the euro would be in the interests of all three entities. But, so far, no action has been forthcoming.
Prodi suggested in an interview in a German magazine that the U.S. current account deficit could be helped by joint intervention to weaken the dollar. "Something like this is never simple, especially not before a United States election even if we are now at a point where it would be in America's interests. Nobody can live forever with such a current account deficit."
Monetary Affairs Commissioner
called for a stronger euro. "In the future we believe that the euro will move back to a more natural rate which would reflect its historical value," he told a parliamentary committee.
And Austrian Finance Minister
this morning said in a published interview that the
group of euro zone finance ministers should make it clear that they will intervene when appropriate.
Still, all of this talk has had little effect on the market. The euro is holding above yesterday's levels. At the New York opening, euro/dollar is trading around $0.8610, having revisited its record lows earlier at $0.8555.
"There's been pressure from the European Commission from Romano Prodi on joint intervention for the euro from the big three central banks," said Luke Seajic of
. "I think it will fall on deaf ears, they'll be throwing their money away."
Dollar/yen is opening slightly higher at 106.55. The euro has remained close to its all-time lows against the yen. It touched a new low of 90.70 before edging higher to open at 91.65.
Sterling is still suffering as a by-product of the weak euro. The pound is opening at $1.4025. It had fallen to a 15-year low of $1.40 in earlier trading.
"The pound is hitting lows not seen since 1985, " Seajic said. He points out that the U.K. is in the throes of a major gasoline price struggle, with the government under pressure to ensure deliveries and to ease the upward movement of oil prices.
The pound is trading in a narrow range against the euro at 61.40 pence.
Continuing its recent counter-trend moves, the Swiss franc is firmer against the dollar at 1.7675. The market is focused on the possibility of a rate hike when the
Swiss National Bank
publishes its quarterly policy statement on Thursday. In terms of the euro, the Swissy is near record highs of 1.5235.
All of this euro-based activity is leaving Canada on the sidelines. The Canadian dollar, is opening unchanged at C$1.4790.
The Australian dollar is back below $0.5600, as traders await second quarter
due tomorrow. The quarterly increase is expected to be 1.4%, for an annual rate of 5.2%. A strong number would help the Aussie by raising hopes of a further interest rate rise.
The New Zealand dollar is steady at $0.4290.
The Polish zloty is soft at 4.45/dollar, in line with the euro. "Oil prices are a problem, and the euro is a problem," Seajic said.
The South African rand is weak at 7.15/dollar, but is strong against the euro and the pound.
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