Friday 7th March 2008

IMF yesterday…'The Euro's rise has put it on the strong side relative to medium term fundamentals but the dollar's value still needs to come down further. The US dollar has fallen about 20 per cent against a basket of currencies since the end of 2005 and that fall has accelerated significantly since the outset of the sub prime crisis which kicked in late last year.

US economic data continues to point to a slowdown and today's February payroll report will be closely scrutinised for further signs on the health of the economy.

Yesterday the ECB held rates steady and played down the prospects of a rate cut in the near future and did not take the opportunity at the post meeting press conference to express concern at the Euro's strength.

So this morning the dollar opens on the 'back foot' again and although momentum may slow it's difficult not to see further USD weakness.