Friday 14th March 2008

The strength of the Euro and Yen is a cause for increasing concern by both Euro and Japanese officials and unions. But they must appreciate that it is more a problem of US dollar weakness than the strength of their currencies and any intervention if not unanimous will be futile.

The USA is in recession by any economic measure and we have a Fed president at the helm who is focused on lowering rates and letting the currency fall in order to limit the depth of this economic slowdown.

Today markets will be looking to US consumer price inflation data which is expected to remain uncomfortably high for February. At the same time there will be increased caution by market players as we await any news and views from an EU leaders summit discussion on the Euro today.

It is difficult not to see this US dollar falling further but we must be vigilant and disciplined with positions.