With no major issues driving price movements, the forex market seems to be slowing. The strength of the dollar against the yen is in place and could break into significant new levels in the coming days.

"It's very much a summer market," said Neil Mackinnon of

Merrill Lynch

.

The

Group of Eight

meeting of world leaders that took place over the weekend in Okinawa, Japan had little to say about currency markets and is not seen as serving as a major factor in traders' thinking.

Japan's trade surplus for June, released today, rose 3% from a year earlier, with a surprisingly large jump in exports. Japan's Economic Planning Minister

Taichi Sakaiya

said the country's economy is improving, but still has weak areas. "I view the economy with a mixture of optimism and guardedness," he told to a news conference.

"We've seen dollar/yen edge higher and we're within range of Friday's high. The market still seems to have problems with the yen with some uncertainty over the sustainability of the economic recovery," Mackinnon said. The dollar/yen remains close to Friday's highs of 109.20 and is now opening at 108.95.

Eurozone industrial production was up sharply in May, by 0.9% month-on-month and 7.2% year-on-year, data released today shows. The euro is now opening lower at $0.9325 after Friday's close at $0.9375.

The forex market is focused on the relationship between the yen and the euro. At the end of last week, the yen's weakness allowed this rate to move about 3% in favor of the euro, to end the week at 102.05 yen per euro. So far today, the euro has edged back modestly to 101.60.

Said Mackinnon: "102.50 to 103 is now the key level for euro/yen."

Dollar/Swiss franc picked up some of the losses it recorded on Friday and is opening around 1.6665. The euro/Swiss franc rate is unchanged at 1.5545.

The pound is opening little changed at $1.5160. Euro/sterling is lower at 61.50 pence.

The topic of British interest in the eurozone received further input from a

European Union

poll published today. Support for membership of the zone was down by 3% to 22%, far below levels in other EU countries.

The Canadian dollar is firmer at C$1.4665, having pushed through a key level at C$1.4880. The market now anticipates further strength in the Canadian currency.

The Australian dollar is steady at $0.5865. Australian inflation data are expected to be released on Wednesday and could boost the likelihood of further interest rate increases there. The New Zealand dollar is little changed at $0.4615.

The South African rand rallied again and is opening at 6.89.

The Polish zloty is steady at 4.30 per dollar. Further gains for the Polish currency are expected this week.

The Mexican peso is steady at 9.35.

The Indonesian rupiah is opening lower at 8,925 with political pressure on

President Abdurrahman Wahid

in connection with some ministerial changes.

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