Treasury - Daily Forex for day 31.07.2006

The dollar tumbled against its key rivals on Friday after the Commerce Department reported the U.S. economy slowed more than the market had expected in the second quarter, shrinking hopes for yet another interest rate hike on August 8. The gross domestic product grew by 2.5% on an annual basis in the April-June quarter, below analysts' forecast of a 3% gain. This week, investors will look at the Chicago PMI and ISM Manufacturing surveys, a core PCE reading on inflation, and the monthly report on employment. Thursday's meeting of the European Central Bank is expected to bring a quarter point interest rate hike which will lift the key euro zone rate to 3%.

Cherry-picking in the central European currency markets was behind the crown's drop on Friday. The currency weakened to 28.46 to the euro at the end of the session from around 28.36 in the morning.