Treasury - Daily Forex for day 12.05.2005

The dollar firmed broadly on Wednesday after a U.S. report showed the trade deficit narrowed significantly in March, which eased market concerns over structural problems in the U.S. economy. The deficit shrank to $55.0 billion from a revised $60.6 billion in February, well bellow market forecasts for a $61.5 billion gap. Exports rose 1.5% while imports fell 2.5%. The figure is likely to lead to an upward revision to the first-quarter U.S. GDP. Helping to boost the positive sentiment towards the dollar yesterday, federal budget surplus amounted to $57.7 billion in April, exceeding economists' expectations of a $55.0 billion surplus.

The Czech crown slipped as low as 30.12 to the euro early on Wednesday before jumping back to the stronger side of the 30.0 per euro level driven by strengthening neighbouring currencies. Industrial output data for March released in early trade came in much weaker-than-expected, but the crown showed little reaction. The output rose just 0.1% yoy after a 5.6% increase in February, the poorest result since August 2002, when devastating floods weighed heavily on the industry.