Treasury - Daily Forex for day 03.08.2005

The euro traded in a $1.2150-1.2250 range versus the dollar yesterday in the wake of somewhat mixed U.S. economic data. A core measure of personal consumption expenditures, the Fed's favourite inflation indicator, was flat in June from May. This was below market expectations of a 0.1% rise and May's 0.2% increase. Lower inflation is seen to be dollar-negative as it undermines prospects for more aggressive interest rate tightening. On the other hand, the dollar got a lift from upward revision to U.S. durable goods orders in June. The U.S. Commerce Department also reported that personal consumption was up 0.8% in June from May, while income rose 0.5%, up from 0.2% in the previous month. Factory orders jumped 1% in June, in line with expectations.

The Czech currency extended its gains against the euro on Tuesday, breaking through the psychological 30.0 level. The crown was mainly driven by technical factors.