The dollar showed little reaction to yesterday's benign comments from

Fed Chairman

Alan Greenspan, and his remarks before the House Banking Committee gave no new guidance for currency markets.

Forex trading this morning is directionless and has no underlying trend. "In terms of the dollar, it's really just stops," said Tamiko Bayliss of

Commerzbank

in London. "Everybody's waiting for the

Employment Cost Index

(

definition |

chart |

source

) numbers tomorrow. It's a period of uncertainty regarding the dollar."

The euro is opening little changed from yesterday at $0.9395.

Retail sales in Italy rose 2.3% for the twelve months to May, giving some confirmation of the strength of the economic recovery in euroland.

The euro is steady against the yen and is opening at 102.40. The forex market is being driven at the present by the view that the euro is a better short-term investment than the yen, as well as a persistent tendency to sell yen and buy euros.

The yen continues to look soft, but has maintained yesterday's closing levels at 109.10. Rumors of the resignation of

Bank of Japan

governor

Masaru Hayami

weakened the yen briefly before they were officially denied.

Further evidence of the weakness of the Japanese consumer sector came in today's publication of retail sales data for June. Sales fell 1.1% in the past twelve months. The Japanese stock market declined.

Dollar/Swiss franc is lower at 1.6520. The euro/Swiss franc rate is unchanged at 1.5515.

The pound is a little firmer at $1.5175. Euro/sterling is steady at 61.85 pence.

The latest report from the

Confederation of British Industry

suggests that manufacturing output is slowing in the U.K. Approximately twice as many manufacturers are pessimistic about the prospects for the next few months as are optimistic. The strength of sterling against the euro is quoted as a major factor.

"We've seen a little bit of a fall in cable," said Bayliss, referring to the sterling/dollar relationship. "We saw some pessimism in the CBI numbers. This just shows that British industry is struggling."

The Canadian dollar is largely unchanged at C$1.4665.

The Australian dollar staged a modest recovery overnight and is opening at $0.5900, half a cent better than yesterday's close. The Australian consumer price index rose 0.8% in the last three months, for a year-on-year increase of 3.2%. This raises the possibility of further interest rate increases from the

Reserve Bank

. The New Zealand dollar is also fractionally firmer at $0.4615.

The South African rand is opening unchanged at 6.95. The South African producer price index for June was up 8.8% year-on-year, slightly higher than expected.

Following yesterday's completion of the sale of 35% of the Polish telecommunications company

TPSA

, additional details are now emerging. About half of the sale revenue of $4.3 billion will move through the currency market. This will underpin the zloty as the exchanges are implemented over the coming months. To date, the Polish currency has seen modest firming and is opening this morning at 4.28 per dollar.

The Mexican peso is at 9.35.

The Indonesian rupiah is steady at 9,070.

Back to top