The dollar rose against the euro this morning despite sharp losses on Wall St overnight and amid the fierce debate over how deep US interest rates will be cut next week At 0900, the euro was trading at USD1.1692, down 0.4pc. Its position was not helped by news from France this morning, where Insee cut its 2003 growth forecast to just 0.8pc.
Overnight, the Wall Street Journal joined in the debate on the upcoming Federal Reserve meeting, adding its voice to those predicting just a 0.25pc rate cut, just a day after the Washington Post said the central bank would cut by 50 basis points. According to Jenny Pollack, senior economist at AIB Treasury, while an aggressive rate cut would widen the gulf between US and eurozone interest rates and could lift the euro, it would also bolster a US economic recovery, which would be dollar supportive. "Thus, the impact of swings in sentiment about the size of the anticipated easing in US monetary policy are far from clear cut," she said. ////www.fxcentre.com