Currencies: Trading Less Than Scintillating Ahead of U.S. Holiday

The euro is modestly weaker in quiet trading. France's Fabius has an idea for euro-zone integration.
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There is a predictably quiet opening before the July 4 holiday in the U.S.

The euro is opening slightly weaker at $0.9490. "Certainly is pretty quiet," said Derek Halpenny at

Bank of Tokyo Mitsubishi

. "Euro/dollar is coming off a bit. It's struggled to get through 96 and so some people have been squeezed out."

The euro zone

Purchasing Managers' Index

stood at 59.5 in June after 59.7 in May. While slightly below the past two months readings, the indicator is still seen as strong and consistent with solid growth. The U.S.

Purchasing Managers' Index

is due at 10 a.m. EDT.

French Finance Minister

Laurent Fabius

has suggested that the euro could be the basis for a faster integration of the

European Union

. "In my view, the group of countries

to speed integration could be formed around those which use the euro," he said as France took over presidency of the EU.

On its cross rate with the yen, the euro is 1% lower at 100.40 after Friday's close at 101.60 yen. "There is no reason for the yen to rise against the dollar and the euro," said

Haruhiko Kuroda

, Japanese vice minister for financial affairs.

Dollar/yen is opening higher at 105.80. The market is awaiting tomorrow's quarterly

tankan

report on the performance of Japanese industry and is concerned over the threat of

Bank of Japan

intervention if the outlook for the yen receives a boost from the tankan report.

"The tankan is expected to be pretty strong," said Halpenny.

There is some possibility that the BOJ will raise its interest rates at its July meeting but most traders believe that the bank will prefer to wait as economic fundamentals in Japan remain weak.

The pound has given up much of its Friday gain and is opening at $1.5100. The euro has remained steady vs. the pound at 62.75 pence.

The

Bank of England

holds its monthly

Monetary Policy Committee

meeting Thursday and is expected to leave interest rates unchanged.

A memo prepared by the head of the government group focused on inward investment into Britain has threatened a "possible meltdown of the U.K.'s manufacturing base" if the Labor government does not confirm that membership in the euro zone is official policy.

Dollar/Swiss franc is firmer and is opening at 1.6380. The euro is a little firmer at SF1.5550.

U.S. dollar/Canadian dollar has continued in a tight trading range, to open at C$1.4800.

The Australian dollar is opening unchanged at $0.5985.

The New Zealand dollar is unchanged at $0.4680.

The South African rand is opening firm at 6.79.

The

PRI

candidate has lost a presidential election in Mexico for the first time in 71 years. The initial market reaction to the election of

Vicente Fox

has been positive, with Mexican bonds gaining sharply and the peso rallying to 9.62 from Friday's close at 9.82.

The Polish current account deficit for May was $376 million after a deficit of $850 million in April. The zloty has opened unchanged at 4.35 per dollar.