Inflation report dampens the Euro

The Euro had a rough day yesterday as the inflation report came in at 4.0% on high end of the expectations.

News that the inflation in the euro zone had hit 4.0% in June-double the ECB target rate pushed the euro to a three week high against the dollar of 1.5836 yesterday morning. But the euro ran out of gas before hitting a record high of 1.60 set in April.

The Sterling struggled to hold on to recent gains in European trade falling to overcome resistance at 1.9965 to fall a low of 1.9875. A poor UK consumer confidence survey and drop in property prices triggered the sell off with better than expected U.S economic data adding momentum to the move.

The Dollar had rough ride yesterday but was able to recover off lows and make small gains in to the NY session. US treasury Paulson spoke about the strong dollar policy and supports. The June Chicago PMI came out better than expected at 49.9 jumping from 48.2 in May.