Treasury - Daily Forex for day 16.05.2007

The dollar depreciated against the euro on Tuesday after disappointing U.S. CPI and capital flows data cast a shadow on the U.S. economic outlook. U.S. consumer prices rose 0.4% in April, below a 0.5% gain expected. The core CPI advanced 0.2%, in line with expectations. Net capital flows into the U.S. amounted to $45 billion in March, less than market expectations and not enough to cover a $63.9 billion that month's trade deficit. On the other hand, the euro was encouraged by data showing GDP in the euro zone grew by higher-than-expected 3.1% yoy in Q1.

The crown was again trapped in a narrow band against the euro yesterday, shrugging off a stronger-than-expected industrial output growth for March. The ouput jumped 12.7% yoy, beating market forecast for a 9.1% rise. This morning, a higher-than-expected 0.6% mom increase in producer prices had also little impact on the currency market.