Treasury - Daily Forex for day 18.04.2007

The dollar hit a new two-year low against the euro on Tuesday and fell versus the yen and sterling, which breached the $2 magic level for the first time in almost 15 years. The dollar slipped after data showed U.S. core consumer prices rose just 0.1% in March, less than market expectations for a 0.2% increase, while U.S. March industrial output dropped 0.2%. The British pound got a boost from U.K. consumer prices, which jumped to a 3.1% annual rate in March, the highest rate in at least 10 years. The report bolstered expectations the Bank of England will raise interest rates to 5.5% next month. The European currencies were also helped by a report showing Germany's ZEW consumer sentiment index picked up more than expected in April.

The crown traded on the stronger side of the 28.0 per euro level yesterday, supported by much better-than-expected retail trade data. February retail sales surged by 9.4% yoy, beating market and our forecasts for a 6.5% increase.