NEW YORK (CNNfn) - A lack of support from the European Union kept the euro on its knees Monday, while the dollar edged up against the yen and the bond market played second fiddle with investors.
In early U.S. trading, the euro fell to $1.0632, nearly a half cent down from its Friday close and close to an all-time low of $1.062 touched overnight.
Economic concerns and, most recently, armed conflict in neighboring Yugoslavia have kept the European currency on a downward course since its launch less than four months ago.
On Monday, the euro suffered after European finance officials made weekend comments indicating little concern over exchange levels.
France's Minister of Finance Dominique Strauss-Kahn told a meeting of the continent's monetary authorities that a waning euro poses "no problem" for Europe's economic outlook. German central bank president Hans Tietmeyer echoed the sentiment, saying he does not expect the euro to trade lower than par against the dollar, a plunge of up to 5 percent.
Currency traders took these comments to mean Europe won't aggressively intervene to defend its currency from speculators or other adverse trading factors.
Meanwhile, the euro's battered bulls were watching Germany, where the monthly Ifo business sentiment report is due Tuesday. The index has fallen consistently over the last 10 months, but traders hope the resignation of unpopular German Finance Minister Oskar Lafontaine will spark an upturn and give the euro a boost.
On the other hand, fear of prolonged hostilities between NATO and Yugoslavia continued to weigh heavily on the euro.
Among other disquieting weekend developments, Italy's Treasury Minister Carlo Azeglio Ciampi asked Saturday's pan-European finance meeting to tally the economic costs of the war, highlighting growing investor concern that Europe will have to bear the fiscal burden of the NATO effort.
Sakakibara forces yen back
The dollar fiddled while the euro fell, inching up against the yen after a leading Japanese fiscal authority overnight started a new round of verbal currency intervention.
By 9:00 a.m. ET, the greenback was up to 118.11 yen from 117.92 yen late Friday.
Eisuke Sakakibara, Japan's vice-minister of finance known as "Mr. Yen" for his dogged attention to currency matters, warned speculators that Japan will take "decisive" action to keep the yen's value at an acceptable level near 120 to the dollar.
Backed as they are with the threat of the Japanese government flooding currency markets with yen, Sakakibara's comments proved enough to check the yen's advance, at least temporarily.
Bonds on back burner
U.S. Treasury bonds got scant support from the dollar's good fortune, slipping slightly instead as investors watched the stock market.
The benchmark 30-year Treasury bond was down 1/32 of a point in price at 95-10/32 in early trading, while the yield edged up to 5.57 percent.
Traders said expectations of yet another rallying day on Wall Street were keeping interest in bonds subdued. Within the bond market itself, little fresh economic data was on the horizon to tempt investors to take any firm positions one way or another, leaving the market adrift.
-- by staff writer Robert Scott Martin