Treasury - Daily Forex for day 07.06.2006

The U.S. dollar appreciated broadly on Tuesday after the Wall Street Journal quoted St. Louis Federal Reserve President William Poole as saying that a weakening U.S. economy may not lead to a drop in inflation. The market took his comment as a signal that the Fed might again hike interest rates on a June 28-29 meeting to curb inflation expectations. Unlike the Federal Reserve, the European Central Bank is widely expected to raise rates by at least quarter percentage point at its next monetary policy meeting on Thursday.

The Czech crown erased all of its post-election losses on Tuesday, ending the session near the 28.20 per euro mark. Even the disappointing foreign trade data did little to reverse the upward march. The April trade balance posted a mild surplus of 0.16 billion crowns, while the market had forecast a surplus of 3.4 billion crowns.