While the dollar recovered sharply yesterday, it is still close to the three-year low against the yen and the all-time low against the euro that it touched earlier in the week. Among the many market concerns is the fall in the inward flow of investment funds into the States and, most recently, this announcement of trade quotas on Chinese fabrics.For the US, the most important trading relationship now is not the one with the European Union, nor even those with its North American Free Trade Agreement partners but the one with China. Improbably, the product that has tipped them into action is the bra. There has been a surge of Chinese exports of bras to the US, displacing tradition suppliers in central America. The United States authorities do seem at last to accept that their current account deficit will have to be tackled. This has led the administration into announcing that it will use a WTO provision to put a quota limiting the growth of imports of bras, evening gowns and knitted fabrics to an annual rate of 7.5 per cent.It is early days of course, but the news troubled the foreign exchanges.

The advantage of selling to EMI, whose offer is partly in shares, is that Time Warner gets a share of the very considerable synergy benefits.EMI has demonstrated that it can survive without Warner Music, but it may be a pretty miserable existence.jeremy.warner independent.co.uk. To really motor in what Mr Nicoli calls "an industry going through unprecedented change", EMI needs that deal.Negotiations to buy Warner Music from Time Warner are at an advanced stage, but the pitch has been queered by the emergence of a private equity rival headed by the US based media moguls, Edgar Bronfman Jr and Haim Saban. The advantage to Time Warner of selling to Mr Bronfman is that it's a clean cash exit and there is no regulatory risk. If they succeed, then both EMI and Warner Music on their own will look much smaller than the two market leaders, Sony/Bertelsmann and Universal Music, and however well they perform against the goliaths, they are bound to feel the squeeze.Mr Levy claims to be making headway in the battle against music piracy, but despite the recent success of paid for download services such as iTones, it's an uphill struggle and it's still far too early to say the tide has been turned. His success with recorded music is complemented by exceptionally strong growth in some areas of music publishing, most notably mobile phone ring tones, whose success in selling music has come as a genuine surprise to all.Eric Nicoli, the chairman, would like us to believe that such a creditable performance shows that EMI doesn't need a deal. If he can secure Warner Music, then great, but the company is capable of standing on its own two feet without support.

Well, perhaps, but much depends on whether Sony and Bertelsmann manage to achieve their own rival merger. Flat sales and level pegging operating profits may not seem much to write home about. On the other hand, set against an industry where sales are declining by more than 10 per cent a year, they look positively miraculous. At a time when competitors are being forced to discount heavily just to keep sales from falling off a cliff, EMI has managed both to grow market share and to hold its operating margins.Heavy cost cutting has helped but, more encouragingly, the group is beginning to produce a steady flow of creative success. Alain Levy, EMI's head of recorded music, seems to have achieved just the right balance of new and old in his roster of artists - from Norah Jones and Coldplay to old reliables such as re-releases of the Beatles. China, whose currency is pegged against the dollar, meanwhile becomes more competitive still. All the ingredients are there for the perfect trade storm.EMI on a rollWith all eyes still firmly focused on whether EMI can pull off the acquisition of Warner Music, yesterday's interim figures from EMI were always going to struggle to command attention, but actually they were well worth waiting for.

Since its 2002 peak, the dollar has declined by nearly 25 per cent against other major currencies. There's almost certainly further to go, endangering the export-led recovery in Europe and Japan. In the past, foreigners have been happy to fund the trade deficit by investing heavily in US assets. Recent figures have shown a sharp fall-off of capital inflows.

• Lower down the pecking order PhotoMe fell 5
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• You couldn't have a better training than that
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• 7m Football European Championship qualifiers 1972
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• 2 million students to a staggering seven million
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• He was a remarkable able and ebullient character
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• Sex is the last great secret between parents and children
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• This was the keynote speech of his state visit
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• The sum is a £200000 increase on last year
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• Tim now signs all his emails: Tim the bastard
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• Now that was a bigger change than anything at the start of the show
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