*Last Updated January 19, 2006, 1:17 am

Daily report by CMC Markets

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FOREX ANALYSIS

Eurozone inflation and US jobs data in focus

January 19th - The major currency pairs have continued to trade in relatively tight ranges through the Asian session with little directional news being released. However, indications that we may now be poised for a rally amongst stocks in Tokyo could lend a degree of support to the Yen after traders had expressed some concern that a major sell-off of equities could result in some significant outflows being recorded. Although there’s a flurry of economic announcements due for release through today’s session, US weekly jobless claims, the oil inventories and Eurozone inflation data seem set to dominate. Mounting inflationary pressures in Europe continue to add weight to the argument for another rate hike from the ECB and indications now seem to be that the next tightening of monetary policy will be at the March meeting. As a result, the prospect of converging interest rates between Europe and the US should stand to offer some support for the common currency in the months ahead, although price inflation in the US on the back of bullish oil prices combined with soaring wage bills may yet cause some concern for the Fed…

Stuart Scrase and Enis Mehmet



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