Treasury - Daily Forex for day 11.05.2006

The dollar rebounded from its fresh one-year low against the euro following the Fed's widely expected quarter-point interest rate hike and the accompanying statement, which said that the bank may need to raise rates further. The Fed looks increasingly worried about fresh inflation impulses arising from higher prices for energy. The dollar also trimmed losses against the yen, rebounding from an eight-month low after U.S. Treasury report on currencies said China was not a currency manipulator.

The crown held within sight of its all-time high against the euro yesterday underpinned by a series of favourable domestic economic data. The foreign trade balance for March posted a higher-than-expected surplus of 9 billion crowns. April consumer prices rose by a mere 0.1%, leaving the yoy rate flat at 2.8% and the unemployment rate fell to 8.3% in April from 8.8% in March, in line with expectations.