*Last Updated February 12, 2006, 11:50 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar looking robust as Bernanke’s first testimony awaited

February 13th - With another slew of economic data due out of the US in the coming days, currency traders will likely continue their focus on the future direction of interest rates. Inflationary pressures will be closely watched but the new Fed Chairman Ben Bernanke also makes his first public appearance since taking over from Alan Greenspan later in the week and many are expecting further assurances that there will be more rate hikes to come in the months ahead. As a result there may well be a general reluctance to drop long dollar positions in the near term, although profit taking after Wednesday’s statement remains a real possibility. Oil prices are softening and the March US light crude contract touched its lowest level this year ahead of the weekend break. This will be good news not only for the manufacturing sector but also as it can be expected to reduce the US trade deficit, in turn giving the Federal Reserve a little more freedom to continue hiking interest rates in due course. Essentially there’s little around that seems likely to detract from the dollar’s popularity in the days ahead – US PPI readings due Friday or the escalation of any geopolitical events may break this trend but otherwise the greenback appears to be in a robust mood.

Paul Jackson and Enis Mehmet



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