Treasury - Daily Forex for day 26.10.2006

The U.S. Federal Open Market Committee held interest rates steady for the third consecutive meeting yesterday, in line with expectations, but the accompanying statement disappointed some traders, who then started selling the dollar against the euro and yen. The statement provided lower-than-expected support for the view that U.S. interest rates would rise further, mentioning that the U.S. economy was losing steam and that oil prices have declined. In Europe, by contrast, the Ifo business sentiment index surprisingly rose to 105.3 in October from 104.9 in September. Analysts had expected the index to drop to 104.5.

The crown traded in a narrow band against the euro on Wednesday, ignoring government statement that officially dropped 2010 euro adoption target, while setting no new date.