Treasury - Daily Forex for day 01.06.2006

The dollar rallied against other world's currencies yesterday after minutes from the May 10 Federal Reserve's policy meeting suggested that the bank was still worried about higher inflation pressures. The statement reinforced market expectations that more rate hikes might be needed, lifting the 2-year U.S. Treasury yield to a 5-1/2-year high. The dollar got additional support from stronger-than-expected U.S. data and a decline in the prices of oil and gold. The Chicago Purchasing Management's index jumped to a 7-month high of 61.5 in May, sharply exceeding forecasts for a fall to 56.0

In the absence of domestic market-moving data, the crown continued to hold in a tight range against the euro on Wednesday. The market has shown no signs of wariness of the elections so far.