The dollar surged sharply on the currency market this morning after US forces stormed central Baghdad overnight and reportedly seized three Iraqi presidental palaces. US military officials said troops had secured Saddam Hussein's main presidential palace and another palace in the city centre as well as a third near the airport. The greenback jumped to its highest level in more than two weeks against the euro, breaking through the USD1.06 level to USD1.0589. It rose to a four month high on sterling, pushing the pound under USD1.55.
But Jenny Pollock, senior economist at AIB Treasury, warned that the dollar's recent rally leaves vulnerable to news that the war is not progressing as fast as hoped. She added that while economic data is proving very much a side show at present, "the longer the current weak trend continues the greater the concerns for the long term health of economies". Meanwhile, oil and gold tumbled this morning on news of further success for the US in Iraq. At 0900, brent crude in London was down 83c, or 3.4pc, to USD23.58 per barrel, while gold dropped USD5.40 to USD319.60 per ounce, dropping under USD320 for the first time since December 2002. //www.fxcentre.com