Wednesday August 31, 2005 - 08:16:45 GMT
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CMC Markets - www.cmcmarkets.com
Yen under sustained pressure as Katrina weighs on input costs.
August 31st - The release last night of FOMC meeting minutes has reinforced trader opinion that we’ll see at least two further rate hikes of 25 basis points each before the year is out and this has in turn lent further support to the dollar. Soaring oil prices are also putting pressure on the Asian currencies overnight with the Yen – as always – continuing to feel the pinch. The Japanese economy continues to struggle and this sharp increase in manufacturing input costs looks set to continue holding back the recovery for some time yet. Hopes of earlier in 2005 of seeing a test on the 100 level for USD JPY are now long gone with the 110 level starting to fade too. The oil inventory data that’s due for release later in the session is going to be closely watched although the shut down ahead of hurricane Katrina is likely to skew these numbers somewhat. This could lead to some added short term volatility in currency markets as the session progresses but just how quickly the manufacturers can get production in the Gulf of Mexico back on stream – combined with Friday’s US non-farm payroll figures - is what is most likely to provide the real direction.
Wayne Roworth and Enis Mehmet
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