Treasury - Daily Forex for day 10.08.2005

The U.S. dollar weakened moderately against the euro in an immediate reaction to the widely-expected decision by the Federal Reserve to raise the fed fund rate by 25 basis points. Some traders seemed disappointed by the accompanying statement which showed lower Fed concern about future inflation. Nevertheless, expectations for the fed funds rate to reach at least 4% by year-end have remained intact. Going forward, traders will pay attention to U.S. foreign trade data on Friday, which is expected to show a deficit of $57.3 billion in June, widening from May's $55.35 billion.

The crown stopped appreciating against the euro yesterday and slipped from 5-month peaks hit in the previous session. CNB's Vice-Governor Miroslav Singer said late on Monday that a renewed crown firming may postpone an interest rate hike or could even lead to debate about another cut.