Tuesday 22nd April

The return of market confidence that was apparent last Friday was quickly extinguished yesterday as once again the Euro soared higher and share markets took a knock as the No.2 US bank, Bank of America reported Q1 profits below expectations and rekindled concerns that the fallout from the credit crisis has further to run.

The bank's report cooled risk appetite and prompted investors to dump the dollar on views that bank losses from the troubled mortgage sector and tightness in credit markets will keep pressure on the US dollar. Also comments on EZ economic growth and inflation from ECB's Liebsher yesterday and Mersch today (FT Deutschland) has supported the Euro and if the volatility can be subdued we target $1.6500 sometime this year.

B of E's £50 billion 'credit buster' not well received and Sterling under pressure yet again.