Treasury - Daily Forex for day 04.12.2005

The dollar firmed against the euro on Thursday, ignoring a euro zone interest rate increase, as possibility of another ECB's hike in the near term is low. The ECB, as expected, raised its main refinancing rate by 25 basis points to 2.25%. But the move failed to prop up the euro, as ECB President Jean-Claude Trichet reiterated that the bank's first rate increase in five years is unlikley to be followed by a series of rate hikes. The dollar was also helped by U.S. Institute for Supply Management, which said its manufacturing index dropped to 58.1 in November from 59.1 in October, but that was still slightly above forecasts of 57.5. Elsewhere, the dollar climbed to its highest level against the yen in two and a half years, boosted by its strength versus the euro. This afternoon, markets will look to U.S. payrolls data for November, which are expected to show around 210,000 new jobs.

The Czech crown appreciated against the euro yesterday, despite ECB's interest rate hike which put the key euro rate above the Czech level. This morning the crown managed to breach its historic high of 28.85 to the euro.