Treasury - Daily Forex for day 06.06.2007

The U.S. currency dropped against the euro and yen on Tuesday after Federal Reserve Chairman Ben Bernanke warned of protracted effects of ailing U.S. housing sector on the economy, and due to expectations of the European Central Bank interest rate hike this afternoon. A report showing U.S. service sector growth hit its highest level in more than a year helped the dollar recover only briefly. The Institute for Supply Management's services index jumped to 59.7 in May from 56 in April, beating market forecasts for a drop to 55.3.

The Czech crown slid to three-month lows against the euro yesterday, knocked down by expectations that the European Central Bank would hike rates to 4.0% on Wednesday, which would boost the gap between euro zone credit costs and Czech rates back to 125 bps. This morning, the crown ignored April foreign trade report which showed a higher-than-expected 3 billion crown surplus, the first April surplus in 13 years.