The dollar firmed against a basket of currencies this morning but gains were contained by the risk that US retail sales data due later tday may cloud expectations for a pause in the US rate cut cycle.
Sterling lost the most ground against the US currency as domestic factors came in to play, with housing and
retail sales data weighing on sentiment.
The US central bank, having slashed borrowing costs by 325 basis points since September to 2 per cent, is
expected to pause the easing campaign aimed at limiting damage caused to growth by the ongoing credit
crunch.
Nagging doubts remain however on whether enough has been done by the US government and Federal
Reserve to get the ailing US economy back on track.
Retail sales data due at 1.30pm could well reflect that, analysts said.
A slew of Federal Reserve officials, including Fed Chairman Ben Bernanke, will also speak on credit markets
and the economic outlook later in the day and could flesh out thinking on the prospect of a pause in cutting
rates.
The dollar was up 0.1 percent on the day against a basket of six major currencies at 73.010, while the euro
fell almost 0.2 per cent to $1.5520, with the single European currency now down roughly 3 percent from last
month's record high struck at $1.6018.
Traders said the dollar was also benefitting from an improved risk environment as stock markets rallied in
Europe, taking a lead from a strong Nikkei close in Tokyo.