A return to risk as concerns in Dubai eased enabled the euro to post gains against the US dollar

The single currency edged higher against the US dollar yesterday, supported by rising risk appetite as concerns over the banking sector in Dubai abated slightly.

• A pledge by the UAE central bank to provide support to Dubai banks quelled some concerns about the health of the area's economy, after Dubai's appeal late last week for more time to repay billions of dollars in debt repay debts shook confidence in global markets.
  
• The move to contain the fallout from the Dubai debt crisis, which last week sparked a surge in haven demand for both the dollar and the yen, boosted investor confidence and weighed on the US currency.
  
• The euro also found support after data revealed an upside surprise in the eurozone CPI inflation rate to 0.6%, having read -0.1% the previous month.
  
• In trading this morning, the euro has continued to press higher, already up over half cent as risk seeps back into the market following the welcoming news that UAE central bank has established emergency liquidity for local and foreign banks working in Dubai.