*Last Updated January 4, 2006, 1:58 am

Daily report by CMC Markets

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FOREX ANALYSIS

FOMC minutes dominate currency markets.

January 4th - It has been the release of the FOMC meeting minutes last night that provided the greenback with some solid direction through the Asian session. This has been the clearest signal yet to suggest that the ongoing hawkish approach to monetary policy is on its way out and an end to the current cycle of rate hikes does appear to be imminent. As a result, the dollar has moved through key levels against a number of the major currencies - the Euro is now trading past 1.20, Cable above 1.75 and the Yen is rallying back towards 115. Higher oil prices will likely also be causing concern amongst those trading the dollar, with US light crude touching $63 overnight on renewed buying interest in the commodity from speculators. This is threatening once again to extend the US trade deficit as we move on into 2006 - something that would stand to further undermine the dollar in the months ahead - and although interest rates will likely provide the most significant direction for the dollar in the medium term, any additional signs of economic weakness after yesterday's lacklustre construction spending data will result in additional pressures on the downside...

Stuart Scrase and Enis Mehmet



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