*Last Updated March 14, 2006, 11:41 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar held at lower levels overnight

March 15th - Major currencies have been little changed against the greenback after yesterday’s dollar sell-off in light of a wider than expected US current account deficit for Q4 2005 and falling retail sales figures. Again there’s mounting consensus that the Fed may need to turn less hawkish in its stance over interest rates and with limited data around to provide further direction overnight, attention will now be focusing on today’s data including TICS readings and the Beige book. Failure for capital inflows to cover last week’s balance of trade figure may case some concern amongst investors as to the strength of the US economy, whilst any further posturing by the White House over the situation in Iran could also impact the dollar – perhaps most notably if any direct intervention starts to look likely. Oil prices have already edged higher in light of this, so today’s inventories will be under scrutiny but it would likely require another bumper stock to apply any notable pressure on the downside as traders may prove difficult to distract from anything but the longer term picture. The dollar could still move either way, but a return to the week’s earlier highs may prove reliant on not only a run of good US numbers, but also on fading support for other currencies too…

Tim Wilbraham and Enis Mehmet



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