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In a fairly quiet market, the yen has bounced back from yesterday's low of 109.35 and opened at 108.90. Today's U.S. data have not had a major impact on forex rates.

However, the yen's modest boost this morning may just be a temporary one as investors are not excited by the outlook for the Japanese economy. Once again the Tokyo stock market has suffered substantial losses overnight with the equity market affected by concerns raised by the recent bankruptcy of the


department store group.

"I want to take some more time to watch the stock market's movements before judging the affects of the fall in stocks," said

Toshiro Muto

of the Ministry of Finance, addressing a news conference. "There is no reason now to change our view that that Japan's economy is on a moderate recovery track," he added.

The U.S.

Employment Cost Index


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) for the second quarter rose by 1.0%, slightly below expectations.


durable goods orders

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) rose by a surprising 10%, compared with expectations of no change.

These data give some support to those who anticipate further interest rate hikes in the U.S. "We still think that there will be an increase in August and that there's still some strength in the U.S. economy," said David Page of

Investec Bank.

The euro opened at $0.9380, lower than last night's close.

The German


institute has forecast 2.7% growth for Germany in 2000 and 2.8% for next year. Further falls in unemployment are also expected.

Further signs of inflation rising in the euro zone were given in data from Ireland today. Finance Minister

Charlie McCreevy

is now forecasting inflation around 5% for the current year, compared with the original budget estimate of 3%.

Recent momentum in the forex market has been largely generated by the euro's gains vs. the yen. Today, this trend has run out of steam and the euro has lost ground to 102.15 yen from yesterday's close at 102.85.

Dollar/Swiss franc is opening firmer 1.6550. The euro/Swiss franc rate is steady at 1.5535.

The pound is steady at $1.5140. Euro/sterling is lower at 61.90 pence.

In yet another leak of government memos, it is reported that Prime Minister

Tony Blair

is committed to the U.K. joining the euro zone and regards the political case as, "overwhelming." This leak contrasts with the official policy of the


government which is to defer any decision until the next Parliament.

"We're thinking that the

Bank of England

will raise rates, even though the economy doesn't really need it. The pound will lead the BOE to that decision," said Page, who feels that the much of the economy is doing well even if the manufacturing sector is under pressure.

The Canadian dollar opened at C$1.4665, ahead of price and earnings data due later today.

The Australian dollar is steady at $0.5905 after briefly peaking at $0.5935 on hopes of further interest rate increases by the

Reserve Bank of Australia


The New Zealand dollar is little changed at $0.4600.

The South African rand is lower at 6.93.

The Polish zloty is holding slightly better levels and opened around 4.30 per dollar.

The Mexican peso is a little firmer at 9.34.

The Indonesian rupiah is also firmer at 8,975.