*Last Updated May 17, 2006, 12:04 am

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar under further pressure as traders eye CPI reading

May 17th - Yesterday’s US economic data was watched with a degree of interest by many and the generally lacklustre nature of it has reinforced the message that the cycle of interest rate hikes at the Fed will likely be coming to an end in the not too distant future. As a result of this, the dollar has collapsed again in overnight trade and key psychological levels for GBP and EUR are once more in sight. We do however have the US CPI data due in a few hours time and this will likely stand to act as some kind of litmus test as to the overall state of the economy - any marked contraction here could prove sufficient to squeeze the dollar further and although oil inventory data due later in the session will be closely followed, prices have rallied again to just below the key $70 a barrel level as supply concerns continue to weigh. This fact is something that will continue to weigh on the economy as a whole, although after today there’s only the weekly jobless numbers, leading economic indicators and some comments from the Philadelphia Fed left on the US economic calendar ahead of the weekend break, so significant support may well prove somewhat difficult to find…

Wayne Roworth and Enis Mehmet



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