Treasury - Daily Forex for day 04.04.2006

The European common currency was broadly stronger on Monday, climbing to a fresh two-year high against the Swiss franc and testing a one-year peak against sterling. The euro also firmed against the dollar after a report showed an unexpected drop in U.S. manufacturing sector in March. The Institute for Supply Management reported its manufacturing activity index fell to 55.2 from 56.7 in February, lagging behind expectations for a rise to 57.9. The ISM's report was in sharp contrast with the similar report released earlier in the euro zone, which showed the region's manufacturing sector grew at its fastest pace in five years in March. Later this week, market participants will be focusing on Thursday's ECB monetary policy meeting and the March U.S. jobs report due on Friday.

The Czech crown broke through key technical levels, rising as high as 28.375 to the euro, a one-month high. The currency was encouraged by expectations of upbeat foreign trade data and bullish sentiment towards central European currencies. In fact, the foreign trada for February showed a 7.05 billion crown surplus this morning, lower than market forecast for a surplus of 8.5 billion crowns. The crown slid after the report.