*Last Updated December 5, 2005, 12:59 am

Daily report by CMC Markets

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FOREX ANALYSIS

Beijing in focus as traders look for news of Yuan revaluation

December 5th - The inevitable Yuan revaluation that has been discussed frequently through 2005 looks set to play a leading role in currency markets as we approach the year end. Many are suggesting that the continued appreciation of the dollar against the Yen is tied to the fact that there could be further news out of Beijing in the coming days and a move for USD JPY down towards 122 now seems to be on the cards. However, the rapid decline in the Yen’s value is a cause for concern at the Fed where action is still required to manage the US trade deficit which continues to show little in the way of sustainable signs of contraction. Higher oil prices are also cause for concern, again not only because of the increase this will have on US imports, but also as it fails to provide any real assistance for the Japanese manufacturing sector which is continuing to struggle and until there’s any notable expansion here then the country’s economic recovery does seem set to continue to struggle. In the longer term it may well be that Wednesday’s oil inventory figures provide some significant direction but attention looks set to focus on any news out of Beijing in the days ahead…

Wayne Roworth and Enis Mehmet



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