Treasury - Daily Forex for day 10.10.2005

The dollar firmed against the euro on Friday on the back of a report showing the U.S. economy lost fewer jobs than expected in September. The so-called non-farm payrolls came in at -35,000 last month affected largely by Hurricane Katrina, but economists had forecast even a deeper decline of 143,000. The Labour Department also revised up its estimates for job growth in July and August by combined 77,000. The unemployment rate, however, rose to 5.1%, the highest since May, from 4.9% in August. This parly limited the dollar's advance as well as the security threat in New York. Nevertheless, the Federal Reserve is expected to continue tightening of monetary policy, with many analysts anticipating the key fed rate to peak above 4.50%.

The crown rebounded from six-week lows against the euro on Friday, with some investors turning their attention back to favourable domestic fundamentals. Minutes from the latest CNB's monetary meeting showed that the board voted unanimously to keep interest rates flat at 1.75%, but warned of steeper rise in inflation and wages due to surging energy costs. Today, September inflation came in at slightly lower-than-expected -0.3% on the month, while the unemployment rate dipped to 8.8% from 8.9% in August, as expected. The crown showed limited reaction to these reports.