Treasury - Daily Forex for day 13.01.2005

The dollar tumbled against other main world currencies on Wednesday after news of a much higher than expected U.S. trade deficit for November. The U.S. trade gap widened sharply to a new record of $60.3 billion, exceeding market forecasts of a $54.0 billion reading. October's deficit was revised upwards to $56 billion. The disappointing result reminded the markets that the U.S. economy was facing deep structural imbalances. Traders are now keeping their eyes on Thursday's U.S. retail sales data and Friday's report on producer prices. The sales are expected to rise by 1.0% in December, while PPI is seen dropping 0.1% last month.

Czech National Bank board member Jan Frait knocked the crown lower against the euro yesterday by saying that a further currency gains could slow domestic economic growth. Frait added that there was no further room for appreciation this year. Despite this stiff comment, the crown regained ground late afternoon, helped by bullish sentiment in other currencies of central European region. This morning the market shrugged off a balance of payments report showing current account deficit amounted to 6.05 billion crowns in November, above forecasts of a 3.2 billion gap.