*Last Updated April 24, 2006, 3:14 am

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar retreats as pressure builds on China to revalue Yuan in near term

April 24th - After last week’s Sino-US summit, calls over the weekend for Yuan appreciation from the G7 have underlined the need for some realistic movement here in the near future. In anticipation of the fact that pressure will continue to increase on the Beijing government to revalue the currency, the dollar has found itself under sustained pressure through early trade – a stronger Yuan would help Asian currencies across the board so perhaps unsurprisingly it’s been the Yen that has received the most support of the major currencies, although the Pound and Euro continue to consolidate the gains from late last week too. There’s little fundamental data due out of the US today but further dollar direction may well be seen as a result of posturing in anticipation of how the Chinese will react, although momentum from economic indicators will likely pick up as the week progresses. The Japanese corporate services price index is due for release overnight whilst the Fed’s beige book - indicating business confidence which may be suffering from high oil prices - is scheduled for later in tomorrow’s session too. Furthermore, as the week progresses the IAEA report in Iran is also due Friday and this may spur further comments from the US over action in the Middle East. The dollar is under pressure and if the recent sell off looks to be overdone a reversion may follow but otherwise it’s difficult to see where the next run of greenback appreciation may come from.

Paul Jackson and Enis Mehmet



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