The euro pushed close to USD1.18 against the dollar this morning as markets continued to price in a US rate cut at the end of the month. The euro should have made even further ground after European Central Bank (ECB) president insisted that talk of further easing in interest rates is premature. But the bank's downward revision to growth and inflation targets and talk of deflation have convinced markets that further easing is in the pipeline.
"Duisenberg's insistence that rates will remain on hold should have been positive for the euro but it gained little more than half a cent and continues to trade in a tight range against the dollar, well shy of its USD1.1935 high," said Geraldine Concagh, senior economist at AIB Treasury. She added that a growing conviction is emerging that the dollar adjustment has finished, but she noted that a lot of risks still surround the US currency. At 1000, the euro was trading at USD1.1791 and at 70.43p against sterling. //www.fxcentre.com