*Last Updated January 23, 2006, 11:50 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar continues downward adjustment amidst geopolitical and oil price uncertainty

January 24th - There’s been no indication of a let-up in the siege that’s currently being laid against the dollar by major currencies across the globe. The Asian session has seen the greenback edge lower once more and there is still a myriad of geopolitical concerns on the table, including perhaps most significantly the Iran situation and last week’s tape from bin Laden threatening further attacks on the US. There’s also little consensus over the future direction of interest rates at the Fed – next week’s meeting is seen as very much a done deal with another quarter point being added but after this there are significant questions as to what happens next. Wage inflation does appear to be imminent as output rises and the labor market continues to tighten, but at the same time higher borrowing costs could start to limit further economic expansion. Near term expectations appear to be that the dollar is poised to shed around another two to three cents against the Euro with technical analysts eyeing a slide on to levels as far as $1.26 and with little high profile economic news due for release in the coming days, right now it’s difficult to see what could reverse this slide…

Stuart Scrase and Enis Mehmet



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