Treasury - Daily Forex for day 01.03.2005

The U.S. dollar fell against European currencies and the yen on Friday on the back profit-taking and U.S. fourth-quarter GDP data coming in slightly weaker than a Fed official had expected. The first revision of GDP for Q4 showed the U.S. economy grew 3.8% annually, modestly faster than economists had forecast. However, Federal Reserve Board Governor Ben Bernanke had hinted on Thursday that the GDP growth might reach around 4%. Adding to the soft sentiment towards the U.S. currency, the U.S. data on existing home sales in January was also disappointing. The market now turns its attention to this week U.S. manufacturing and payrolls reports.

Shrugging off concerns over a break-up of the Czech government coalition, the crown jumped to new 2-1/2-year highs against the euro on Friday. In addition to bullish regional sentiment and improving export and economic growth prospects, a CNB's no-change decision on Thursday could also get some boost to the currency. The central bank left its key short-term rate at 2.25% for the moment, but Governor Zdenek Tuma suggested that the next move will be a cut.