Treasury - Daily Forex for day 03.09.2006

The European Central bank held interest rates unchanged, as expected, on Thursday, but bank's President Jean-Claude Trichet signaled that the rates may have to be raised soon to keep inflation pressures in check. Later in the day, the dollar firmed slightly versus the euro as traders squared positions ahead of Friday's keenly awaited U.S. non-farm jobs report, seen as a clue of next direction of U.S. monetary policy. On the data front, the U.S. core personal consumption expenditure index, a key measure of inflationary pressures, rose just 0.1% in July, below market forecasts for a 0.2% increase.

The crown was little changed versus the euro on Thursday after the Czech National Bank left interest rates steady at its monthly policy meeting. The main two-week repo therefore remains at 2.25%, 75 basis points below the benchmark rate of the European Central Bank.