The euro nudged ahead against major currencies this morning, capitalising on an absence of significant economic newsflow today. At 0930, the single currency was worth USD1.1758, while against sterling, it was up at STG0.7015. "It seems that the market has finally come around to our way of thinking - to maximise the strength of the American recovery, the dollar is going to have to stay weak," noted Niall Dunne of Ulster Bank Financial Markets. "ECB comments at last week's press conference, which seemed to accept the euro's appreciation as inevitable, are also helping the single currency, and of course America's twin deficits haven't gone away," he added.
This week marks the beginning of what is cautiously expected to be an upbeat third quarter earnings season in the US. However, according to Dunne, "No matter how strong Q3 earnings season turns out to be for America's corporations, America will still face a budget deficit in excess of 5pc of its GDP this year, and its balance of trade deficit will also near the 5pc mark." //www.fxcentre.com