Treasury - Daily Forex for day 02.08.2006

The dollar weakened across the board on Tuesday despite bullish U.S. economic data. The U.S. currency was driven by technical factors which overshadowed better-than-expected manufacturing activity and dollar-supportive comments from U.S. Treasury chief. The data showed U.S. factory activity rose unexpectedly in July, while core PCE, an inflation measure favoured by the Fed, rose to 2.4% on an annual basis in June from an upwardly revised 2.2% in May. Treasury Secretary Henry Paulson reiterated the U.S. government's strong dollar policy, providing the currency a short-lived boost.

The crown was trapped in a tight range around 28.50 to the euro yesterday, shrugging off a small central state budget deficit for January-July and a marginal deceleration of manufacturing activity in July.