Treasury - Daily Forex for day 26.01.2006

The U.S. dollar rebounded from earlier losses against the euro in a technically-driven trading on Wednesday, ignoring a much bigger-than-expected 5.7% drop in U.S. existing home sales in December. Earlier, the euro got a boost from German Ifo business confidence index, which came in at 102.0 for January, above December's 99.7 and above an expected 99.9 reading. Tomorrow the market will pay attention to advance data on U.S. fourth quarter GDP growth, which is expected to show a slowdown to 2.8% from 4.1% in the third quarter.

The Czech crown continued to appreciate to new record highs against the euro on Wednesday, firming as high as 28.290 per euro in its biggest daily rise for nearly five months. The steep firming of the crown in the past weeks has encouraged speculations of a possible interest rate cut. The central bank holds its policy meeting today, and even though it is expected to push lower its inflation prediction for the next 12-18 months, it will most likley keep its key policy rates unchanged.