22 January 2003, 15:26  Euro holds USD1.07 as war fears dominate

The euro held steady above the USD1.07 mark in early deals this morning, as war fears continue to weigh on the dollar. Against sterling it was also supported at STG0.6632. A dearth of data today will leave the focus on eurozone inflation with the final HICP for December expected to confirm a 2.3pc inflation rate, up marginally from the estimated 2.2pc, according to Geraldine Concagh, senior economist with AIB Treasury. "However, the data are unlikely to provide any direction to forex markets with Iraq dominating. The BoJ kept monetary policy unchanged as expected, thus causing little impact on the markets," she added. The euro took some comfort in yesterday's unexpected increase in the German ZEW expectations index for January. The increase fuelled hopes that the broader Ifo sentiment index could also surprise on the upside when it is released next week. However, Concagh was less upbeat, warning that after seven month's of decline, the scale of the turnaround in the index did seem to leave it open to question. ///www.fxcentre.com

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