*Last Updated September 3, 2006, 11:59 pm

Daily report by CMC Markets

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FOREX ANALYSIS

Labor day may leave dollar to drift ahead of Wednesday’s beige book & productivity data

September 4th - The dollar remains under pressure as the new trading week gets underway and with no US economic data scheduled to be released today because of the Labor day holiday, the prospect of finding any additional upside - other than off the back of some straightforward profit taking - does seem to be quite limited. Indeed the outlook remains quiet for the greenback tomorrow too, although with non-farm productivity and the beige book both due on Wednesday, further momentum should be available as the week progresses. A sharp increase in Japanese capital spending for the second quarter has added weight to the Yen’s recent rally with USD/JPY slipping back below 117 overnight although there’s still some debate as to how this data will impact the revised GDP readings due next Monday on the basis that growth amongst the bigger companies remains comparatively tardy. Elsewhere, Eurozone PPI numbers will attract some attention as traders continue to work on when further rate hikes can be expected out of the European Central Bank. Consensus is that there will be at least one move higher before the year end but any suggestion that this will come sooner rather than later will likely result in the 2006 highs so far on EUR/USD around 1.2980 being tested again in due course.

Tim Wilbraham



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