The dollar remains in demand following last week's comments from Hans Blix and ahead of the re-opening of Wall St today following Friday's rally. The euro remains at USD1.07 against the greenback, from close to USD1.10 earlier in the month, as the threat of war appears to have temporarily receded in the eyes of the market. However, a "war premium" against the dollar has not been removed despite indications from the UN's Hans Blix that Iraq had co-operated with its inspectors, according to analysts in Dublin.
"The US continues to keep the option of war open and any dollar upside will be blighted by uncertainty as the US returns from its long weekend," said Geraldine Concagh, senior economist at AIB Treasury. "The euro has re-established a strong base at USD1.07 and a push past USD1.0750/60 should sustain upward momentum." Both the dollar and the euro were also weaker against the yen, in part due to investors converting dollar-based coupon payments on US government bonds into yen ahead of the fiscal year-end. The dollar fell to Y119.24 against the Japanese currency, while the euro dropped to Y127.68 from Y129 yesterday. //www.fxcentre.com