The euro surged on to a 1.18 ‘big figure’ Wednesday but has found it very difficult to hold on to that level. By the New York afternoon it was back on 1.17 and through the Asian and European sessions overnight the high has been USD1.1799. The move lower certainly hasn’t been driven by any incoming economic news (factory orders in Slovakia are never a market-mover!) and ECB Chief Economist gave a pretty upbeat address to a working group of bank economists in Brussels this morning. He noted that, “domestic demand has become the mainstay of growth in the euro area, making the recovery more resilient to developments overseas. Real GDP growth is projected to remain above potential growth in the coming years. The strength and resilience of the recovery tends to foster our confidence that reflationary forces will gradually support a return of headline inflation towards a level that is below, but close to, 2% over the medium term”. For all the fancy econometric analysis available to the ECB through its vast and highly-qualified Research staff, we’d simply point out that petrol prices are now rising throughout Europe. And when prices rise, so does inflation! ECB Council member Villeroy de Gallau speaks in Amsterdam as we publish this commentary, whilst his colleague Constancio is topping up his air-miles and speaks later in the day in Ottowa. EUR/USD opens in North America at 1.1760 having broken down through the Asian low of 1.1770. EUR/CAD, meantime, is clinging by its finger tips to a 1.50 ‘big figure’ and opens around 1.5006.