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 7, 7:00 PM: EUR/$..0.8702 $/JPY..133.92 GBP/$..1.4141 $/CHF.=
.1.6914 Japanese Forex Trading Preview by Darko Pavlovic At 12:00:00 AM J=
apan Dec Machinery orders m/m (exp -10%, prev 14.9%) At 6:50:00 PM Japan Ja=
n Domestic WPI y/y (exp -1.3%, prev -1.4%) Japan Jan Money Supply (exp 3.5=
%, prev 3.4%) The dollar rose to 134 yen after January domestic WPI fell 0=
.2% m/m. The index was down 1.4% from the previous year, the 16 th consecut=
ive month of year on year decline, adding to gloomy economic outlook. Janua=
ry M2+CD money supply rose 3.6% y/y. For the upcoming G7 meeting in Canada =
this weekend, some analysts think that Japan seems reluctant to weaken the =
yen significantly, given all the criticism by its Asian neighbors and US ma=
nufacturers that the weak yen is undermining their trade competitiveness. I=
n the meantime, markets are also anxious about any monetary policy decision=
that might be reached at the ongoing Bank of Japan meeting. With deteriora=
ting conditions, the BoJ is under considerable pressure to ease monetary po=
licy to address the nation's economic quagmire. Since interest rates are ne=
arly zero, the central bank may have to resort to increasing its purchases =
of JGBs from the current level of 800 billion yen to nearly 1 trillion yen =
in order to inject liquidity in markets and stabilize bond yields. Any such=
move would likely weaken the yen further, and thus skeptics believe the Bo=
J may refrain from such a drastic measure because of international pressure=
at the G7 meeting. PM Koizumi said on Thursday he was willing to continue =
with reforms despite the plunge in his cabinet's approval ratings.' I belie=
ve structural reform is needed to realize sustainable growth of the Japanes=
e economy in the future,'' the PM said. Koizumi also repeated the governmen=
t's plan to take brave measures to evade a financial crisis. Support is vi=
ewed at 133.40, 133.0 and 132.65. Upside capped at 134.15, 134.40 and 134.8=
0. US Treasury Secretary O'Neill advocated that all G7 nations must donate=
to growth to increase living standards. He declared that the worst of the =
US economic slowdown is over and that there are more signs that a US econom=
ic recovery is present. Furthermore, O'Neill urged Japan to implement measu=
res to get its economy on track, but declined to comment on the value of th=
e Japanese yen. EUR/USD is trading near its day's highs of 87.13 underpinn=
ed by ECB President Duisenberg's announcement of his retirement in July 200=
3, as well as optimism over the Eurozone's economic future. ECB's Duisenber=
g announced today his decision to step down early for reasons of transparen=
cy and to squash speculation, adding that it is a well-known fact that he w=
ould not stay for a full-term, but ruled out the possibility of retiring ea=
rlier than July 2003. He stressed that there is no connection between his a=
nnouncement and a succession by serving Vice-President Noyer. German indust=
rial orders rose 5.0% m/m in December from the previous 0.6%, fueling hopes=
that a recbound is in the works. Traders disregarded the European Central =
Bank's result this morning to hold rates steady at 3.25% because they are a=
t an suitable level. ECB head Duisenberg commented that monetary developmen=
ts do not create risks to price stability, but added that a reassessment ma=
y be needed if the economy recovers. ECB President Duisenberg once again re=
iterated that inflation should fall below 2% this year and stay there, thou=
gh he foresaw inflation would be erratic in early 2002. Moreover, French Fi=
nance Minister Fabius confirmed that he lowered France's growth outlook in =
2002 to 1.4-1.6% from an initial range of 2.25-2.5%, and projected GDP in 2=
003 between 2.8-3.2%. Resistance is seen at 87.20, 87.50 and 88.0. Support =
stands at 86.35, 86.0 and 85.55-- the 71.8% Fibonacci retracement of the mo=
ve from 82.25 to 95.95. The UK currency shrugged off the Bank of England's=
unsurprising decision this morning to leave rates unchanged at 4.0% in lig=
ht of the UK's 2-speed economy characterized by robust consumer and housing=
spending that is being offset by a contracting manufacturing industry. Res=
istance is eyed at 1.4165, 1.420 and 1.4235. Support holds at 1.4060, 1.404=
0 and 1.40. This week's remaining US indicator is wholesale trade. From t=
he Eurozone, major economic releases consist of German industrial productio=
n and Dutch CPI. Highlights from Japan are money supply, wholesale prices a=
nd machinery orders. Over the weekend, currency traders will be carefully m=
onitoring any developments at the G7 meeting in Toronto for any mention of =
the weak yen or strong dollar policies. ECB President Duisenberg indicated =
that the euro is unlikely to be mentioned in the G7 communique. =09[IMAG=
E] Audio Mkt. Analysis Euro Crawls Higher in Quiet Trading Articles &=
Ideas A Weak Yen Bites Even Koizumi Drags Down the Yen Articles &=
Ideas Forex Glossary Economic Indicators Forex Guides Link Library =
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