The dollar edged higher against the euro and sterling in early Monday trading following a narrower than expected US current account deficit, to 1.4332 and 2.0103, respectively. Traders continue to favor the greenback amid a combination of year-end thinning trade conditions and tempered expectations for further aggressive Fed easing. Recent economic data has validated the FOMC's decision to ease by 25-basis points at the December meeting and suggests that persistent inflationary pressure will prevent the Fed from aggressively cutting rates to support the economy.

Inflation