Treasury - Daily Forex for day 15.11.2006

The U.S. dollar recovered against the euro late on Tuesday after French Prime Minister Dominique de Villepin called for more cooperation among euro zone countries on managing the exchange rate. The markets took his comment as a call for a weaker euro as its current strength may hit European exports and growth. Earlier, the dollar fell on data showing a sharp slowdown of wholesale inflation and a drop in retail sales. The core producer price index fell 0.9% m/m in October against analysts' forecast for a 0.1% rise. Retail sales, excluding the auto sector, fell 0.4% m/m in October following a 1.2% drop in September. The market had expected a fall of just 0.2% in October. Against the yen, the dollar's decline was sparked by a report that showed Japan's economy expanded by a solid 2% annual rate in Q3, double market forecasts.

The domestic currency was immune to a strong rally of the Slovak crown which hit a new record high against the euro yesterday. By contrast, it slid to 28.10 per euro in the late trade. The domestic economic data released earlier had limited impact on the trading.