The dollar remains under pressure this evening following the war talk from George Bush last night and ahead of this evening's Federal Reserve policy decision In his State of the Union address, George Bush once again spelled out that the US will attack Iraq if Saddam Hussein does not disarm "Last night's address confirms we will see war," said Niall Dunne, economist at Ulster Bank. "Perhaps this means the dollar hasn't got much further to fall in the near-term; but a brief spike above USD1.10 on the outbreak of hostilities can't be ruled out.
Geraldine Concagh, senior economist at AIB Treasury, this morning described USD1.10 for the euro as a "reasonable target" However, if the war is short and successful from a US perspective, then analysts believe a correction back to the USD1.03 range will occur "If war is short and successful, if Iraqi oil isn't set ablaze, and if no terrorist reprisals occur in the US or Europe, this war could ultimately boost the US economy. and the dollar will strengthen. But that's a lot of ifs," said Dunne. The Fed is not expected to change rates following its meeting, but there is some concern that it will move to an easing bias. //www.fxcentre.com