Treasury - Daily Forex for day 15.06.2005

The dollar extended its gains verus the euro on Tuesday to hit a fresh nine-month highs as disappointing U.S. economic data did little to change the market's view that the Federal Reserve would continue to push interest rates higher. U.S. producer prices tumbled 0.6% in May, marking the largest drop in over two years and coming in well below a 0.2% decline expected by the market. Core PPI rose just 0.1%, below forecast of a 0.2% increase. Moreover, retail sales fell 0.5% in May, the biggest drop in nearly a year. Excluding the volatile car sector, the sales dipped 0.2%. The market had expected a 0.2% drop in overall sales and a 0.2% rise in ex-auto sales. Today, currency markets will focus on a slew of U.S. economic data including CPI data for May, capital flows data for April and industrial production figures for May.

Shadowing a rise in other currencies of neighbouring post-communist countries, the crown firmed moderately against the euro in yesterday's session. Today, the euro/crown rate was little changed after a report showing April retail sales rose 2.7% y-o-y, below market expectations of a 3.2% increase.