The euro slipped in early deals today, with both the dollar and sterling firming slightly on hopes that there may be some compromise at the UN over extending the deadline for war with Iraq. At 0845, the single currency stood at USD1.1023, while against sterling, it was at STG0.6840. According to Jenny Pollack, senior economist with AIB Global Treasury, the dollar's somewhat firmer tone is also being supported by the suspicion that the Japanese authorities may intervene aggressively to prevent the yen from appreciating further in order to protect the fragile Japanese economy.
"The US currency, though, remains very vulnerable to news flow about the situation in Iraq. The US has stated that a vote on a second resolution will take place this week. Hopes of such a resolution being passed are slim but the US seem quite prepared to go to war alone, even without UK support if necessary," she added. She also said that economic data due later in the week, including retail sales, industrial production and consumer sentiment are expected to provide further evidence of the problems currently facing the US economy. //www.fxcentre.com