The euro was pressured in early deals today as geopolitical concerns look set to dominate the markets once again following yesterday's bombing in Madrid. The euro initially came under pressure but then recovered when Al Qaeda was reported as being responsible. These reports weighed on the dollar in late trading, pushing the euro and sterling higher. However, the euro failed to hold the USD1.23 level. At 0900, it stood at USD1.2254. While volatility levels are up, given the mixed implications of the attacks, markets are being careful not to react too aggressively.
The UK's potential exposure to Al Qaeda is putting some pressure on sterling, with the euro extending its gains to STG0.6836 in early deals. Sterling is also off on a sharp fall in UK stocks and recent poor trade and manufacturing data, which have dented speculation of a hike in rates in April, according to AIB Capital Markets' Geraldine Concagh. US data due for release today include Q4 current account details and the preliminary Michigan sentiment survey for March. ///www.fxcentre.com