The dollar has weakened marginally overnight, with the boost provided by yesterday's equities gains being offset by upbeat assessments of the Japanese and European economies in the overnight sessions. As suggested yesterday the forex market sees no strong incentive to hold long dollar positions and movements tend to be shallow and lacking conviction.

Dollar/yen has eased from last night's U.S. close of 106.50 and is now trading in Europe at 106.20. The yen was helped by a

Bank of Japan

report that indicated that the Japanese economy is now improving. Finance Minister

Kiichi Miyazawa

said, "Overall, the economy is clearly starting to get out of recession." The dollar fell as low as 106 but no BOJ intervention was noted.

The Australian dollar continued its recent improvement and has seen highs around $0.6160.

Following its slightly better performance in New York yesterday the euro has not been able to maintain these levels in Europe and is opening in New York at $0.9620. Like the yen, the euro was given some support by a

European Central Bank

report that forecast further growth in the euro zone and indicated some upward pressure on prices. Traders took this comment as an indication of possible interest-rate rises to come. While the euro has not really benefited from further buying interest, it has seen a generally steadier trading environment.

Data showing that German exports rose 20.5% in January with imports up 25.1% compared with one year earlier was below analysts' expectations.

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The euro/yen cross now stands at 102.20, well below the New York close of 103.

The pound has given ground against the dollar and is now down from late New York at $1.5780. Contrary to the policy goals of the U.K. government the pound continues to look firm vs. the euro, and that cross is now below 61 pence.

The Canadian dollar rallied to $1.4580 yesterday on positive comments by

Bank of Canada


Gordon Thiessen

, but these modest gains have eroded overnight and the $C is trading at $1.4560 in early New York trading.

Forex markets are still essentially choppy but, as noted yesterday, some signs of positive sentiment towards the euro have managed to surface. The recent market interventions by the Japanese authorities continue to suggest that a more aggressive BOJ strategy is now in place. U.S. stock markets made solid gains on Thursday but in general recent sessions have not offered any consistent direction to forex traders. Today's trading will be closely watched for indications of the next trend. Overseas activity has neither confirmed nor denied the modestly better tone to the dollar, but trader sentiment remains skeptical toward the euro.

The treasurer of a major overseas bank told

that he remained bullish on the dollar at these levels against both the yen and euro. He sees 105 on dollar/yen providing a base for a solid rally. The euro is seen as persistently soft with the euro/yen cross likely to fall to new lows.