*Last Updated February 1, 2006, 12:17 am

Daily report by CMC Markets

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FOREX ANALYSIS

Fed rate verdict leaves little impression on currency markets

February 1st - Yesterday’s FOMC rate announcement has been received in a rather mixed mood by currency dealers. Although the wording of the Fed’s accompanying comments may have left the door open for further rate hikes as we move through the first half of 2006, uncertainty over geopolitical issues such as the possibility of conflict in Iran may be providing the market with some very good reasons not to become overly committed to the dollar despite the prospect of further yield improvements. Oil prices also continue to weigh on the market, although there’s a degree of speculation building that some softening may emerge later in the session when the weekly inventory data is released. Expectations are that reserves will look relatively healthy for the time of year so assuming this is indeed the case, crude may be able to edge lower in the near term. There’s little of note on today’s economic calendar although expect a degree of focus on directional US numbers in the weeks ahead. Some believe that the change in stance at the Fed will now mean signs of rising inflation will translate into the next rate hike, so non-farm payrolls, Michigan confidence and the factory orders – all due Friday – can expect to be closely watched…

Tim Wilbraham and Enis Mehmet



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