Treasury - Daily Forex for day 19.01.2006

The dollar erased its early gains and ended the Wednesday's trade little changed versus the euro after European Central Bank board member Lorenzo Bini Smaghi denied a news agency report that he favoured further interest rate hikes. The dollar also briefly strengthened after a U.S. Treasury Department report showing net capital flows into U.S. assets reached $89.1 billion in November, down from revised $104.2 billion in the prior month, but higher than analysts' forecasts for $87.5 billion. The amount of capital inflows was high enough to cover the $64.2 billion U.S. trade deficit in November.

Tracking a continued drop in central European currencies, the crown slipped as low as 28.890 per euro in early trade on Wednesday. But later it rallied on news that the government could sign a memorandum with South Korea's carmaker Hyundai Motors in February, raising the prospects for large money inflows.