The euro slipped against the dollar this morning, dropping 1.0pc since Friday following the stronger than expected Chicago PMI. The better than expected data from the US Midwest has raised hopes that this afternoon's f manufacturing indicator from the Institute of Supply Management will also top forecasts. At 0845, the euro was trading at USD1.0702, down from over USD1.08 on Friday.
The euro is also under pressure following poor news for Germany's economy and for Chancellor Gerhard Schroeder. Retail sales fell in 2002 for the first time in five years, according to figures published this morning, while Schroeder's SPD party was defeated in regional elections in Hesse and in his home state of Lower Saxony on Sunday. "The rejection Schroeder's SPD reflects continued discontent with the weak economy, tax rises and perceptions that the SPD's pledges in last September's elections were just empty promises," said Geraldine Concagh, senior economist at AIB Treasury. "The news that German retail sales fell strongly again in December won't have helped euro sentiment either." //www.fxcentre.com