The euro held its ground against the dollar at the start of what is expected to be a rangebound session today. At 0920, the single currency was trading at USD1.0094, while against sterling it stood at STG0.6355 The market has been subdued as players await US Fed Chairman Alan Greenspan's testimony on the outlook for the US economy before Congress later today.
However, looming in the background are the possibilities of a US attack on Iraq and fear of Japanese government intervention to weaken the yen, dealers said. In Europe, European Central Bank President (ECB) Wim Duisenburg yesterday followed up on comments made by ECB chief economist Otmar Issing, and both now appear to be laying the ground for an interest rate cut in December The euro should begin to price in an interest rate cut more aggressively over the next few weeks, which could underpin current levels in the exchange rate, according to dealers. M
Sterling was little changed even though UK inflation crept higher to just below the 2.5pc official target. Yesterday's UK inflation was the highest since April. //www.fxcentre.com