*Last Updated April 25, 2006, 12:15 am

Daily report by CMC Markets

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FOREX ANALYSIS

Yen finding support off Yuan revaluation; faltering slightly off mixed economic news

April 25th - The Yen continues to trend higher against the dollar with the upside emerging not so much as a result of an improving outlook for the Japanese economy but more the fact that the imminent Yuan revaluation is expected to push the dollar lower and also lend a degree of support across the Asian currencies in general. Overnight data out of Japan – namely the Corporate Services Price Index – was largely mixed, showing no real emergence of inflationary pressures and although cheaper transport costs have been identified as pushing this reading lower, with crude now sitting well above $70 a barrel such benefits would seem likely to be further eroded in the not too distant future. There’s some US data due out later today and this could provide further important direction with regard to where the Fed’s interest rate policy goes next – US consumer confidence may be faltering again on the back of high energy prices and any deterioration in business confidence – via the beige book – may also add to the pressure for this latest run of rate hikes to come to an end. Since the G7 made it clear last week that it saw the need for change in China as being a pressing issue the Yen has seen some notable gains over the dollar and so long as the pressure remains on Beijing, further upside for JPY may well follow…

Paul Jackson and Enis Mehmet



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