Treasury - Daily Forex for day 02.02.2006

The dollar surged against other major currencies on Wednesday, even hitting a peak of this year against the yen, underpinned by rising U.S. bond yields a day after the Federal Reserve lifted interest rates and signalled that more tightening may come. Construction spending data also supported the dollar, showing a rise of 1.0% for December, above a consensus forecast for a 0.2% increase. The Institute for Supply Management reported its index of manufacturing activity came in at 54.8 in January, below the market expectations of 55.4, but had little impact on the trading. The European Central Bank holds monetary policy meeting today, but no change in interest rates is expected.

The Czech crown slid against the euro yesterday on the back of continued profit-taking ahead of Friday's foreign trade data. The market expects 7 billion crown trade deficit for December.