Treasury - Daily Forex for day 17.12.2005

The U.S. dollar erased some of its previous losses against the euro yesterday, underpinned by news on record capital flows into U.S. assets in October. The Treasury Department reported that the inflows amounted to $106.8 billion, which was high enough to offset the record $68.9 billion U.S. trade deficit for the same month. Analysts had expected an inflow of $75.4 billion. The Japanese currency continued to rebound, rocketing up more than 3% against the dollar in the past two days in the wake of the change in the Federal Reserve's policy statement earlier this week, which led many to think U.S. rates are close to their peak.

The crown appreciated moderately versus the euro in a calm pre-holiday trade on Thursday. This morning, the market took little notice of the report showing a lower-than-expected increase in October retail sales. The sales were up 2.8% y-o-y, while the market had forecast a 4.5% rise.