The yen and the pound have been the focus of the market overnight. The euro has remained in a narrow range with traders confused by the volume of comments and rumored actions.

In addition, the weak performance of U.S. equity markets has had some impact on the otherwise robust dollar.

U.S. retail sales for April fell 0.2%, well below expectation of a gain of 0.4%.

The

OECD

believes that the Fed needs to push U.S. interest rates higher by at least 1%. "The U.S. economy is growing very fast, much faster than we thought," said the organization's chief economist

Ignazio Visco

. As the growth gap between Europe and the U.S. narrows Visco sees the euro's weakness being reversed, "I am quite confident the euro will recover," he said.

There were further contributions to the ongoing saga of the euro. "I am pretty confident about the strength of the euro. I think Europe is strong," said French Finance Minister

Laurent Fabius

. France will take over the presidency of the

European Union

in July.

The

Swiss National Bank

president

Hans Meyer

also predicted a stronger euro in the future. The euro will recover, "certainly within a useful period, but nobody knows when that could be," he said.

As generally expected, the

European Central Bank

left the zone's refinancing rate unchanged at 3.75% after its council meeting today.

"I see a more constructive mood on the euro and we are starting to see some decent portfolio interest," said Michael Derks of

Commonwealth Bank of Australia.

The pound has traded below $1.50 for the first time in four years as analysts become convinced that there is little likelihood of further U.K. interest rate rises in the near term. Euro/sterling has strengthened in line with the pound's weakness and is opening at 60.40, well above the record low of 56.73 last week.

Good news for the pound came in the announcement of a 0.4% gain in U.K. manufacturing output for March, to give a year-on-year rise of 1.6%. Analysts had expected only a 0.2% increase.

Dollar/yen moved erratically overnight in a range of 108.60 to 110.05 but actually opened little changed in New York at 108.60. Euro/yen is slightly weaker at 98.55.

Dollar/Swiss franc has continued to weaken and is opening around 1.7135. The euro/Swiss franc cross is steady at 1.5560.

The U.S./Canada dollar is opening at $C1.4905. The market is awaiting today's Canadian monetary policy report and traders continue to anticipate the impact of the expected U.S. interest-rate rise May 16.

As anticipated, the Australian dollar is still unable to rally from recent lows. The $A is opening in New York at $0.5765 well below last night's close of $0.5815. "If we go through the mid-$0.57 area then the 1998 low of $0.5530 looks viable," says Michael Derks.

After seeing lows of 7.17 per dollar yesterday, the rand is now benefiting from a strong speech by South African President

Thabo Mbeki

who made it clear that any "land invasion" in South Africa would be treated as an illegal action by the government.

Today the rand was continuing its sharp recovery and was trading at 6.99 per dollar. After seeing highs of 6.95.