Treasury - Daily Forex for day 04.10.2007

The dollar firmed to a nearly six-week peak against the yen and continued to strengthened versus the euro yesterday after two separate U.S. economic reports boosted expectations that Friday's U.S. non-farm payrolls data would come out pretty strong. The consensus forecast is for a gain of 94,000 jobs in September versus an August's drop of 4,000 jobs. The Institute for Supply Management's index of service activity in the U.S. dropped to 54.8 in September from 55.8 in the previous month, with the result mildly undershooting the market expectation. In Europe, Italian Prime Minister Romano Prodi and German Chancellor Angela Merkel were the latest officials expressing concern over the negative impact of euro strength on the euro zone economy. The markets are now paying attention to policy outcomes from the meetings of the ECB and BOE later today.

The crown closed Wednesday's trade almost unchanged versus the euro after it briefly dipped as low as 27.62 to the euro during the session. The currency seems now shadowing the regional development.