Japanese Preview

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Interest Rates US: Japan: Eurozone: UK: Switzerland: 1.75% 0.15% 3.=
25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] Japanese Forex Trading Pre=
view February 5, 7:00 PM: EUR/$..0.8677 $/JPY..133.79 GBP/$..14150 $/CHF..=
1.6973 Japanese Forex Trading Preview by Darko Pavlovic No key data. T=
he yen had its biggest fall in four months vs. the dollar of 134.29 after N=
ikkei fell to 18 years low and S?downgraded the ratings for seven large Jap=
anese banks. Another rating agency Moody's was reviewing seven major life i=
nsurance companies for possible downgrades. The Japanese currency remained =
beset by pessimism after opinion polls showed that support for Prime Minist=
er Koizumi was waning, and thus may hinder the implementation of critical s=
tructural reforms. The yen fell 1.5% to 134.29 from 132.35 yen a 1 1/3 slid=
e. The most current poll showed that only 49% of the public supports Koizum=
i, down from 72% last month. As the U.S. President Bush's visit to Japan ap=
proaches in mid-month it is likely that Bush would give additional support =
for the structural reform initiative led by PM Koizumi. But some analysts b=
elieve there is a shift in a US stance from bad loans cleanup to economic g=
rowth. Treasury Secretary Paul O'Neill who visited Japan last month said to=
his counterpart Shiokawa that the U.S. wants to see Japan return to a grow=
th. The FSA submitted to the ruling LDP a report stating that the banks' di=
sposals of bad loans should be completed within two to three years, as plan=
ned. The government plans to clear about 12 trillion yen worth of loans out=
of the 20 trillion yen in bad debts held by large banks by the end of Sept=
ember 2002. New bad loans created since October 2000 should be disposed of =
by September 2003.In yesterday's trading December index of leading economic=
indicators stood at 30.0 below 50 mark for the seventh straight month, sug=
gesting the economy continues to suffer from declining consumer spending an=
d capital investment while industrial output remains weak. As the BoJ start=
s its two day meeting this Thursday and Friday there are some market rumors=
that the central bank could adopt a positive inflation target. USD/JPY res=
istance is eyed at 134.0, 134.40 and 134.80. Support is seen at 132.0, 131.=
50 and 131.25. EUR/USD is trading around 86.80, falling from a one week hi=
ghs of 87.30 in spite of better-than-expected showing in the Eurozone Servi=
ces index that broke above the key 50-level to 51.0 in January from the pre=
vious 49.2, thus denoting an expansion in the sector. The EU business clima=
te indicator also improved to -1.03 from -1.21, marking its strongest readi=
ng since last September. Bank of France Governor Trichet remarked later tha=
t French growth would be better in January than in December 2001, corrobora=
ting the optimism suggested by the indicators.The euro was hurt after Bild=
newspaper announced that German January unadjusted unemployment rose by 3=
26,000 to 4.29 mln, thereby lifting the unemployment rate to 10.4% in Janua=
ry from 9.6% in December. Support holds at 86.35, 86.0 and 85.55-- the 71.8=
% Fibonacci retracement of the move from 82.25 to 95.95. Resistance is view=
ed at 87.50, 88.0 and 88.30. Tomorrow morning's release of US Q4 producti=
vity is forecasted to surge to 2.9% from the previous 1.5%, as a result of =
a reduction in hours worked. Meanwhile, unit labour costs are seen to fall =
to its lowest level since Q4 '99 to 0.7% in Q4 '01 from the previous 2.3%. =
Recall that strong US productivity has been attributed as the main reason b=
ehind the dollar's sustained strength despite the US economic downturn and =
the current account deficit. Thus markets will be awaiting the productivity=
data to determine whether the dollar's strength is justified. This week's=
other key US indicators include jobless claims, consumer credit and wholes=
ale trade. From the Eurozone, major economic releases consist of German une=
mployment, ECB rate decision, German manufacturing orders, German industria=
l production and Dutch CPI. UK indicators comprise the NTC/FRES Report on J=
obs, housing starts, industrial production and the Bank of England's rate d=
ecision. Highlights from Japan are the ESRI Tokyo consumer sentiment, money=
supply, wholesale prices and machinery orders. Over the weekend, currency =
traders will be carefully monitoring any developments at the G7 meeting in =
Toronto for any mention of the weak yen or strong dollar policies. =09[I=
MAGE] Audio Mkt. Analysis Yen Crushed Amid Nikkei Slide Articles & Id=
eas Dollar Does Davos In New York USD/JPY: ONeill, Koizumi and January E=
ffect Articles & Ideas Forex Glossary Economic Indicators Forex G=
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