The dollar drifted higher against the euro in late deals, helped along by the firm tone on both equity and bond markets amid thin trading conditions. At 1715, the euro was worth USD1.1324, while against sterling it was up a touch at STG0.7037. Analysts said that the market's worst fears that continued selling on both fronts will drive the dollar have been allayed. There is also evidence that the economic recovery in the US is gathering pace, they added.
Indeed, the recent raft of US data including yesterday's jobless claims and productivity have been unambiguously sturdy. Also, foreign central banks were active buyers of US assets in the past week, in turn lending the dollar a helping hand. In the meanwhile, with the summer holiday period in full swing, the many empty trading desks also mean that activity levels have dropped off, analysts said. Overnight, US bond and equity markets turned in strong performances partly on the recent run of good US data and partly due to the successful completion of the USD60bn quarterly refunding operations. The record US quarterly refunding is now out of the way.//www.fxcentre.com