Treasury - Daily Forex for day 04.02.2006

The U.S. dollar fell against the euro on Thursday after U.S. intelligence chief John Negroponte, speaking to the Senate intelligence committee, said that al Qaeda is preparing for attacks on the United States. Economic data releases, however, had little effect on the trade. The U.S. productivity fell surprisingly by 0.6% in Q4, while forecasts were for a 1.6% increase. Earlier in Europe, the European Central Bank kept interest rates flat at 2.25%, in line with expectations. ECB President Jean-Claude Trichet told a news conference that expectations for future rate moves are reasonable, boosting speculations that the bank will raise rates in March. Going forward, the market is focusing on January's U.S. nonfarm payrolls report to be released this afternoon. Economists forecast 240,000 jobs were created last month, up from 108,000 in December.

Bearish sentiment toward the Czech crown remained intact yesterday, with the currency weakening to 28.540 to the euro at the end of session. This morning, the foreign trade report showed the deficit of 3.9 billion crowns in December, which put the full year 2005 surplus to 41.9 billion. The market had expected a 7 billion crown gap in December. The crown firmed slightly after the report.