The dollar resumed its decline against major currencies this morning following last night's disappointing report on the US economy from the Federal Reserve. Its Beige Book warned that the economy remained "subdued" and noted "consistently" weak consumer spending. The euro moved close to USD1.06 again, while the greenback dropped under 118 against the yen. Japanese authorities said this week that the finance ministry maintains the right to intervene in the market to curb "excessive" currency movements, although the market does not believe it will act just yet.
Sterling failed to make much headway against the US currency, holding just under USD1.6050. However, tomorrow's US trade figures for November 2002 could change all that, as they will renew concern over the size of the US deficit. Analysts say the report could boost the pound and push the single currency through the USD1.06 barrier again. On a technical basis, traders say a break above USD1.060 clears the way for further gains towards USD1.0620/45 and then USD1.0700/50. //www.fxcentre.com