*Last Updated April 9, 2006, 11:58 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar holding onto Friday’s gains; economic data awaited.

April 10th - The dollar posted some impressive gains off the back of the payroll data and upbeat comments over the outlook for the US economy on Friday, with these positions largely holding solid over the weekend break. There have been some indications of a slight reversion away from recent lows for both the Pound and Euro but until the week’s economic data gets underway it’s going to be difficult to see where any additional direction may be coming from. UK inflation data will be closely watched with the PPI readings due in the next couple of hours – there was no great surprise that the Bank of England left interest rates unchanged at last week’s meeting but some movement – possibly downwards – is expected in the medium term so any additional suggestion as to when this may happen could provide some momentum. Furthermore, traders are looking for a rate hike at the ECB so retail PMI data or perhaps tomorrow’s ZEW survey may deliver something of an insight. Again the debate here is when rather than if we’ll see another 25 basis points added – some discounting of the common currency has likely occurred as opinion started to shift towards a June rate increase but anything to reverse this expectation stands to offer further support.

Paul Jackson and Enis Mehmet



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