*Last Updated September 5, 2006, 12:20 am

Daily report by CMC Markets

Website: http://www.cmcmarkets.com

Email: info@cmcmarkets.com

FOREX ANALYSIS

Dollar recovering marginally after Labor day holiday

September 5th - Currency markets are sitting in a rather mixed mood now with traders mindful that the US spent yesterday observing a public holiday. The dollar has been under pressure recently after a spate of downbeat economic forecasts left many with little doubt that better cash returns are going to emerge from elsewhere but we’ve already seen some opportunistic profit taking drive the USD higher and such short term rallies may reoccur in the near term until we see the next round of fundamental data. Arguably there’s little of note going to be released today so the posturing will continue but tomorrow’s beige book should offer further insight as to just how quickly the US economy is slowing, whilst non-farm productivity and unit labor costs should also provide some additional direction with regard to the presence of inflationary pressures (or lack thereof). The next FOMC meeting is now just over two weeks away so each item of data is going to be scrutinised but the Bank of England also meets this week to debate its current monetary policy. There has already been one surprise hike in recent months and although softer energy prices may start to lift some of the pressures, the bank’s objectives remain clear. Cable is holding above the psychological 1.90 mark and although more profit taking could lead to a dip lower, there’s a good chance that any move like this would prove to be very short lived.

Tim Wilbraham



Phone USA: + 1 212 644 4220
Phone UK: + 44 207 170 8201
Fax USA: +1 212 644 4222
Website: http://www.cmcmarkets.com

Disclaimer: Although obtained from sources believed by us to be reliable, CMC Markets and its affiliates cannot guarantee the accuracy or completeness of the information upon which this commentary is based. This commentary does not purport to disclose the risks or benefits or entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.



Fx-charts.com Disclaimer: The information contained on this website is subject to change without notice, views and opinions expressed on fx-charts.com may be those of individual authors and may not necessarily be the views of fx-charts.com or its officers and employees, we make no claim to the accuracy or timeliness of any information contained herein. We recommend obtaining advice from a suitably qualified financial advisor before entering into any financial transactions or agreements. The use of this website constitutes acceptance of our privacy policy, disclaimer and terms of use. This website is available for information and educational purposes only.