Treasury - Daily Forex for day 15.02.2007

The U.S. dollar slid to six-week lows against the euro yesterday after Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that inflation pressures were set to abate, reinforcing expectations that the Fed will cut interest rates later this year. Earlier, the dollar came under pressure as January U.S. retail sales growth lagged forecasts, remaining flat from December. The market had expected a 0.4% rise.

The benign inflation data released on Wednesday knocked the crown lower against the euro. January CPI came in at just 1.0% mom, dragging the yoy inflation rate to 1.3% from 1.7% in December. The market had expected the CPI at 1.6% mom and 1.9% yoy. CNB's interest rate hike before H2 now seems very unlikely.