*Last Updated January 5, 2006, 1:44 am

Daily report by CMC Markets

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FOREX ANALYSIS

Limited newsflows keeping currency majors rangebound

January 5th - Limited economic newsflows do seem set to keep currencies trading in relatively narrow ranges in the short term after gains against the dollar on the back of the FOMC meeting minutes. There’s likely to be a degree of consolidation with traders focussing on the bigger numbers such as the US non-farm payrolls for December – due tomorrow – and this point has been underlined by the overall failure of the common currency to show much of a reaction to some downbeat German retail sales news out this morning. The oil inventory data can be expected to come under extra scrutiny later in the session as crude continues to rally into the New Year. There’s renewed interest in the commodity from speculators, but higher prices will do little to help close the widening US trade deficit. Any suggestion that there are fundamental issues with keeping up with demand, especially for refined product, could lead US light crude higher as the day goes on and this may in turn start to pressure the already weakened dollar. The counter to this may be that with the greenback having come off some way over the last 36 hours a decision to start booking profits will lend some support, but with a policy change imminent at the Fed, conditions could remain volatile in the near term.

Wayne Roworth and Enis Mehmet



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