The dollar slipped against the euro today, despite growing hopes in the market that a war against Iraq will be short. Trading centres were awash with rumours this afternoon that Iraqi deputy prime minister Tariq Aziz has already fled to the Kurdish-held north of the country, intensifying hopes that the Gulf War will come to a swift conclusion. And although the Aziz rumours were subsequently denied, hopes for a short conflict were further cemented by reports that US forces are amassing on the Iraq-Kuwait border, preparing themselves for an invasion once the US deadline for Saddam Hussein to leave Iraq elapses tonight.
"These rumours have certainly helped the dollar today," said Bear Sterns currency economist Steve Barrow. However, the dollar's failure to take bigger strides today demonstrated that deep uncertainties are still plaguing the greenback. "I expect the dollar to push higher in the early stages of the war, but once troops get to Baghdad, other issues could well emerge," said Barrow.//www.fxcentre.com