The euro hit a new four-year high against the dollar as the greenback headed lower in early London trade amid heightened fears of an imminent US-Iraq conflict. At 0940, the euro stood at USD1.0661, while against sterling it was down a touch at STG0.6586 Pressure on Iraq is increasing after UN weapon inspectors found rocket shells usable for biological and chemical warfare. Today's US industrial production figures for December, at 2.15 pm, are likely to add some intra-day volatility, but not significant enough to chance the trend, dealers said.
Since the autos component of the survey has been the second largest contributor to the rebound in industrial output, observers suggested the data could surprise consensus to the downside following reports that motor-vehicle production fell 7pc in December. Today also brings the US trade deficit data for November at 1.30 pm, and the University of Michigan consumer sentiment for January. Economists forecast that the trade deficit widened to USD37.0bn in November from USD35.1bn in October. Meanwhile consumer sentiment is seen holding steadily in January, rising to 87.1 from 86.7 in the preliminary January reading. //www.fxcentre.com