*Last Updated August 15, 2006, 12:13 am

Daily report by CMC Markets

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FOREX ANALYSIS

UK & US inflation readings in focus as dollar traders look for direction

August 15th - With inflation readings due from both the UK and the US there’s going to be no shortage of fundamental data around during the session to provide direction for currency markets. The dollar has been generally choppy through the overnight session with traders seemingly shorting the currency then booking some quick profits but a slightly more cohesive strategy may develop with the release of UK CPI numbers later in the session. Obviously today’s numbers won’t reflect the recent Bank of England rate hike but a repeat of last month’s bullish figure could initiate some support for further tightening of monetary policy in the not too distant future, adding weight to Cable’s rally over the last 4-6 weeks. Once this has been absorbed by the market, attention is then going to turn to US PPI and also the Empire State manufacturing survey – concerns over the outlook for the US economy ended up weighing on equities and traders are really going to be looking today for some suggestion as to whether the FOMC can look at another rate hike next month. With little consensus having been formed over the September meeting so far, any clear signals emerging from today’s data can be expected to provide further direction as a result…

David Hutchings and Enis Mehmet



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