After yesterday's sharp drop, the euro has seen volatile moves this morning. From the New York closing of $0.8290, the euro dipped further in Europe to new lows of $0.8230 before staging a partial recovery to open in New York around $0.8250.
Traders are very concerned about the risk of central bank intervention as recent falls have been quite rapid and therefore likely to attract attention from the
European Central Bank
"It's a bit of a pause," said Michael Lewis of
. "It seems that there won't be much follow-through."
One factor causing the euro to lose ground is the apparent lack of concern over the fate of the currency shown by the
meeting of finance ministers in Montreal. The draft final statement from the meeting did not directly address the euro's problems but kept to generalized forex issues. Comments made by the ministers were largely limited to repetition of the view that the euro is undervalued and does not reflect the strength of the euro zone economy.
U.S. Treasury Secretary Laurence Summers commented after the meetings that the euro had been informally discussed but there was no, "focused discussion on any particular rate."
U.S. data today and tomorrow could help clarify the dollar's near-term path. "On the dollar side, we've got important quarterly figures and they're expected to be dollar positive," said Derek Halpenny of
Bank of Tokyo Mitsubishi.
Employment Cost Index
) for the third quarter came in at a rise of 0.9%, as expected.
The Japanese yen has again remained outside of the main forex market action and continues to trade around 108.15. The volatile euro/yen cross on the other hand dropped into record territory at 88.85 yen /euro, before pulling back as the single currency bounced higher in later trading. Recently, the euro was worth 89.20 yen.
Sterling has slipped further and is trading a penny lower, at $1.4215. The pound is clearly preferred to the euro and the exchange rate between the two currencies touched a low of 57.50 pence earlier today before edging higher to current levels around 58.05.
The Swiss franc remains under pressure at SF1.8210, following a low at SF1.8300. In euro terms, the Swiss franc has backed off slightly to SF1.5075.
The Canadian dollar dipped yesterday along with European currencies but has since staged a modest comeback to open at C$1.5140.
The Australian dollar was little affected by s sharp increase in Australian wage costs in the third quarter. Average weekly wages jumped 1.7% in the three months to August, well ahead of analysts' expectations. The
is not expected to raise interest rates at its next meeting but may see the need to do so in the coming months.
The New Zealand dollar is unchanged from last night's close at $0.3990.
The Polish zloty is firmer today -- at 4.69/dollar -- on expectations of a improving current account deficit.