Treasury - Daily Forex for day 17.05.2006

The dollar was unable to sustain a rally and weakened broadly on Tuesday after U.S. data suggested the Federal Reserve may not need to raise rates further. Producer prices excluding food and energy rose just 0.1% in April, lagging behind a 0.2% rise expected by the market. Furthermore, housing starts came in at 1.849 million-unit rate, below economists' expectations of 1.95 million. However, the currencies took little notice of news that Venezuela and Iran were considering to price its oil exports in euros instead of the dollar. The market is now awaiting U.S. CPI data for April. The headline figure is expected to show a 0.5% increase on the month, while the core CPI is forecast to have risen by 0.2%.

The crown firmed back to near record highs against the euro in late trade on Tuesday on renewed investor interest in central European currencies. Earlier, the Czech unit drew support from a robust growth in March industrial output.