*Last Updated June 6, 2006, 10:53 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar holds in relatively wide ranges as market awaits fundamental data.

June 7th - Yet again there has been little news around to drive currency markets through the Asian session, leaving the major pairs to churn around recent levels overnight. Arguably however with interest rate verdicts due out of both the UK and the Eurozone tomorrow, there may be little incentive to see movement of any real magnitude in the short term with traders now predominantly sitting out of the market – unless perhaps we start to see further comments over monetary policy emerging from the Fed. With only some limited second tier data scheduled for release, it may well be a case of having to look to the technicals for further direction – both EUR/USD and cable remain rangebound, admittedly in relatively wide brackets but the market certainly seems to be comfortable with 1.2750-1.3000 and 1.8500-1.9000 for the time being. Should the ECB go for a 50 basis point hike this week then there’s a good chance that 1.30 may be tested in due course, although any renewed speculation that rates across the Atlantic may not converge as fast as had been hoped for previously could easily see off any such gains. There’s a lack of fundamental data around but equally there’s no shortage of opinion as to where fair value may lie for the time being…

Tim Wilbraham and Enis Mehmet



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