Treasury - Daily Forex for day 02.05.2005

The U.S. dollar firmed against the euro on Friday as a stronger-than-expected regional purchasing managers report outweighed a soft reading of consumer sentiment in the U.S. Additionally, PCE index - a key measure of U.S. inflation, came in around expectations, fueling speculations that the Federal Reserve would continue to raise interest rates as early as at its meeting on Tuesday. Meanwhile, the yen surged to an 11-week high against the euro and a six-week peak versus the dollar on renewed talk that China might soon let its currency trade more flexibly. It is widely expected that this would lead to a broad strengthening of Asian currencies.

The Czech crown appreciated slightly versus the euro on Friday pulled by strengthening Slovak currency, which was boosted by a Slovak central bank intervention. The main focus of this week - March foreign trade data - are due to be released on Thursday.