Treasury - Daily Forex for day 07.10.2006

The U.S. dollar strengthened against the euro on Thursday as European Central Bank President's comments sounded less hawkish than the market had forecast. Following a widely expected 25 basis point interest rate hike by the ECB yesterday, bank's chief Jean-Claude Trichet highlighted the uncertainty about the monetary policy outlook next year, beyond a broadly expected tightening in December. The market's attention is now turning to U.S. non-farm payrolls report due this afternoon. The data are expected to show 125,000 jobs were added in September, marginally less than the previous month.

The Czech crown continued to advance against the euro yesterday, mirroring the appreciation of other currencies in central European region. The ECB hike was largely shrugged off. Today's data showed the foreign trade posted a 2.1 billion crown deficit in August, almost matching the market consensus.