*Last Updated April 12, 2006, 11:44 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Yen under pressure but possibility of upside ahead of long weekend now emerging

April 13th - With no clear signs coming out of the Bank of Japan just yet as to when we’ll see the next steps toward tightening monetary policy, the Yen remains a less than favourable investment proposition and continues to work towards the top end of the 115.50-119.50 range that we’ve been trading in since the start of the year. Dollar yields are still robust and the prospect of further rate hikes at the FOMC in the coming months is continuing to favour the greenback but at the same time there’s speculation building that after the recent pressure on the Yen, a spate of profit taking before the long weekend may now be seen. Japanese wholesale price data (CGPI) released overnight showed some solid growth and underlined the fact that deflationary pressures are now diminishing but the market seems to remain far from convinced that the downside pressures are at an end. There’s a raft of US economic data due out later in the session including retail sales, weekly jobless claims and the University of Michigan consumer sentiment reading so assuming there are no great surprises some momentum may follow after this news, but until there’s a solid indication that Japanese yields are going to improve, a significant break higher for the Yen is likely to be difficult to find.

Stuart Scrase and Enis Mehmet



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