Treasury - Daily Forex for day 12.10.2006

In a New York trade yesterday, the dollar climbed to multi-month highs versus major currencies after minutes from the last Federal Reserve's policy meeting showed the bank remained worried about upside inflation risks. The report has refreshed expectations that the Fed could raise interest rates once again or at least postpone the start of an easing cycle. Later the dollar got rid of some gains after a small plane crashed into a New York building. But it soon came out that the collision had not been tied to terrorism.

The crown weakened against the euro on Wednesday after failing to break through a key euro support at around 28.100 in the morning trade. President Vaclav Klaus accepted the resignation of the centre-right minority government of Prime Minister Mirek Topolanek. The industrial output report released this morning showed the production rose 7.4% yoy in August, below expectations of a 10.2% increase.