Treasury - Daily Forex for day 02.08.2005

The European single currency firmed against the dollar in early European trade on Monday helped by a stronger-than-expected rise in the euro zone manufacturing purchasing managers index and underlying demand for euros from central banks. The euro zone PMI rose to 50.8 in July from 49.9 in June, above the 50.0 expected by the market. Supporting the euro further, the Russian central bank announced that it had increased the euro share of its target currency basket at the expense of its dollar proportion. Later the euro shed some gains versus the dollar after better-than-expected report on U.S. manufacturing. The ISM index jumped to 56.6 in July, the highest this year, from 53.8 in June and above economists' forecast of 54.5.

Mirroring a positive mood in some other countries of CEE region yesterday, the crown climbed to nearly one-month highs against the euro. The currency, however, took little notice of the favourable central state budget data which showed a 10.3 billion crowns surplus in the January-July, the best result in eight years.