Forex trading was restrained over the weekend, and traders don't expect any significant moves in the near term.
The market believes the U.S. economy is slowing and that interest rates are likely to be on hold at least for the next few weeks.
This view was supported by comments made in London this morning by
Federal Reserve Bank of New York
. "The economy, according to data which came out in the last two weeks, looks as if it is beginning to slow," he said.
This week U.S.
and the German
Ifo business survey
are expected to be the key new data likely to affect currency markets.
"We pretty much think that the dollar will stay weak," said David Coleman at
CIBC World Markets
in London. "The Fed is on hold for the rest of the summer. If you look across the major economic regions, we're expecting interest rates on hold in most centers," he added.
European Economic Union
summit, which starts today in Portugal, is not expected to influence forex markets. The EEU this morning confirmed Greece's membership in the euro zone starting January 1, 2001.
The dollar is opening little changed versus the euro at $0.9630. Euro/yen is weaker at 101.60. Euro zone inflation for May came in unchanged from April at a year-on-year rise of 1.9%. This was a better outcome than had been anticipated.
Dollar/yen opened around 105.60.
Bank of Japan
again said the 16-month-old, zero-interest-rate policy was under review and should end soon.
Some support for the yen came from the comment from the
Economic Planning Agency
, saying the recession in Japan ended over a year ago. However, the agency said it was too early to declare a full recovery.
The pound has remained steady to open at $1.5130. The euro/sterling cross is unchanged at 63.60 pence. Prime Minister
has declined to clarify U.K. policy on euro membership, but said he would support it "strongly" if he ultimately decided to recommend membership.
"There is no reason to buy the pound at the moment. Very much range trading for the time being. Sterling, like the dollar, is expected to be a little bit soft," Coleman said.
Dollar/Swiss franc has gained a little ground to open at 1.6210. The euro/Swiss franc cross is slightly firmer at 1.5610.
The Canadian dollar held better levels at the opening this morning. The U.S. dollar is at C$1.4650.
The Australian dollar is back around $0.6015, having relinquished the 50 points it added at the end of last week. The Aussie is expected to trade quietly in a range of $0.60 to $0.61 in the near term.
The New Zealand dollar is softer at $0.4735.
The South African rand is a little lower at 6.85.
The Mexican peso is steady at 9.86 per dollar.
The Polish zloty has edged higher on the hope of solid export performance. It opened at 4.40 per dollar.