*Last Updated January 25, 2006, 12:34 am

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar regains some lost ground; further directional data awaited

January 25th - The dollar has continues to post incremental gains in the Asian session, recovering from recent lows against many major currencies. The falling oil price and signs of a recovery in the US stock market are without doubt going to be providing some support, but it’s also the last trading session for many ahead of the Chinese New Year so a degree of profit taking may well be underway here. There’s still a belief that the dollar has further to fall in the near term and this afternoon’s oil inventory data could prove critical in this assessment. Any suggestion that there are supply disruptions starting to emerge will likely result in another rally for crude and in turn lead to further downside pressures emerging on the greenback. Furthermore, after a rather lacklustre start to the week with economic data, the agenda is set to pick up as we approach the weekend. Thursday sees durable goods orders for December whilst Friday has the advance Q4 GDP reading. Either of these numbers could provide an indication as to the state of the US economy and in turn provide some indication as to where the FOMC will take interest rates after next week’s meeting but in the shorter term expect a cautious mood to prevai…

Andrew Cottrill and Enis Mehmet



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