*Last Updated May 2, 2006, 12:54 am

Daily report by CMC Markets

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FOREX ANALYSIS

Dollar looking volatile as multiple factors offer direction

May 2nd - The dollar is continuing to gain ground against the Yen through the Asian session after consensus from research firms pointed to slowing Japanese GDP forecasts for the first quarter. Final data isn’t due to be released until later in the month but this news seems to have had the effect of pushing USD/JPY as high as 114 – a significant claw back on Monday’s lows around 112.30 and making the Yen something of an anomaly amongst the majors. Both the Pound and Euro are holding largely steady against the greenback overnight and with confusion still reigning as to which way the Fed will take rates next, some traders seem to be of the opinion that the dollar reversion we saw yesterday may actually be a little overdone. There’s a raft of PMI data coming out of the Eurozone this morning so this may offer a renewed insight as to whether or not the ECB will hike rates on Thursday but this is very much likely to be the number to look out for in the coming days. Opinion is very much split – many feel Trichet will hold off until the June meeting – and this has certainly been the message he’s pushed in recent weeks - although comments from Greek bank officials last week to the contrary are leaving opinion very much divided. Ultimately it’s been a turbulent time for currency markets over the weekend session and high levels of volatility look set to continue in the days ahead.

Wayne Roworth and Enis Mehmet



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