FOREIGN exchange markets were relatively quiet last week with the majority of investors closely monitoring the political fortunes of Russian President Mr Boris Yeltsin. The US dollar closed the week slightly lower against the deutschemark at 1.6315 deutschemarks. Follow-on selling from the previous week's fall, triggered by market disappointment over the size of the Bundesbank's interest rate reduction, had the US dollar testing intra-day lows of around 1.625 deutschemarks. In the latter half of the trading week, the US dollar tried to move higher, driven by chart-induced buying and cautious investors switching to US dollar assets to insulate themselves from any escalation in the political power struggle in Russia. However, the unit was unable to inspire buying interest above 1.643 deutschemarks. Short-term technical indicators are looking bearish for the US dollar, suggesting the unit could ease further against the deutschemark this week. However, in the medium-to longer-term, factors remain in the US dollar's favour. The yen hit another record intra-day high of 115.3 yen against the dollar before retreating slightly to close the week lower at 116.5 yen compared with the previous Friday's close of 115.9 yen. There is continuing speculation that the Group of Seven (G-7) nations will pressure Japan to follow strong yen policies to redress the trade imbalance. Also, belief that the currency is a safe haven from problems in Russia will support the Japanese unit in the near-term, although there could be some selling pressure at the end of the Japanese fiscal year. Sterling drifted lower against the US dollar before a positive economic report by the Confederation of British Industries (CBI) bolstered the unit. The CBI survey on industrial trends confirmed signs of a nascent British economic recovery. Resistance at US$1.50 will prove difficult for sterling to breach at present, but indications are that it will move beyond this level in the medium term. After a month-long rally, the Australian dollar has entered a consolidation phase. James Mitchell is an economist at BNP International Financial Services (HK) Ltd A reduction in the cash rate to 5.25 per cent put the brakes on the Australian unit's rise. Technical analysis suggests that the currency is likely to continue to appreciate in the medium-term, breaking out of its current range of 0.70 to 0.72 US cents. The Bundesbank meeting on Thursday and the release of the March US non-farm payrolls report on Friday should provide good dollar trading opportunities towards the end of the week.