*Last Updated August 11, 2006, 12:34 am

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar finds support amidst uninspiring numbers from Japan, Germany.

August 11th - The dollar has ticked higher against a number of currencies in recent trade after uninspiring economic news from the Eurozone and Japan has left many considering the greenback to be marginally oversold at recent levels. Japanese growth is causing some concern – Q2 GDP grew by just 0.2% versus expectations of 0.4% - and as a consequence of this, it’s little surprise that the Bank of Japan has elected to leave interest rates unchanged. With monetary policy remaining slack and some questions hanging over the longer term outlook for the country’s economy – growth being described by commentators as “tepid” or “moderate” - it’s perhaps of little surprise that the Yen remains at a relative disadvantage amongst the major currencies. German inflation data also left little to get excited about as we approach the weekend break, being in line with expectations and although further rate hikes by the ECB remain likely later in the year, there’s still a question as to precisely when monetary policy will tighten further. US data due before the close – namely inventory readings and retail sales – could readily offer some new direction for the greenback and any suggestion that the economy is slowing may see recent gains eroded but for the time being the dollar does seem to be finding a little support…

Tim Wilbraham and Enis Mehmet



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