*Last Updated August 31, 2006, 11:47 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Month-end profit taking boost dollar, raft of data to provide further direction

September 1st - Month-end profit taking was arguably the only way the dollar received any notable support through yesterday’s session after a run of on-target economic indicators gave currency markets little reason to open new long positions on the greenback. With another raft of numbers due for release as the day progresses – including Michigan consumer sentiment, the ISM manufacturing survey and perhaps most significantly the non-farm payrolls – any upbeat news may provide a little more support for the dollar, especially after Ben Bernanke’s upbeat comments yesterday over the outlook for U.S. productivity in the longer term. There’s also a flurry of data due from the Eurozone as the new month gets underway so the common currency may also find direction in the near term. EUR/JPY has edged back from record highs with the slide starting after yesterday’s largely expected news that the ECB would leave interest rates on hold although consensus is that we’ll see at least another quart point added before the year end. However, with regional manufacturing PMI plus EU growth forecasts for Q3 & Q4 and July’s unemployment figure all slated for release, there’s plenty of scope to identify where inflationary pressures may be coming from and if these are interpreted as requiring a shift in monetary policy in the near term then further gains on the common currency are to be expected.

Wayne Roworth



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