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 12, 7:00 PM: EUR/$..0.8763 $/JPY..132.75 GBP/$..1.4320 $/CHF=
..1.6850 Japanese Forex Trading Preview by Darko Pavlovic At 6:50:00 PM J=
apan Q3 GDP y/y revised (exp n/f, prev -2.2%) Japan Q3 GDP q/q revised (exp=
n/f, prev -0.5%) The dollar fell to a new one week low vs. the yen around=
132.70, due to repatriation flows and on talks government would step up to=
rescue ailing banks. The Japanese currency also rose by nearly a full yen =
to a 3-session high of 116.19 against the euro, in spite of the Bank of Jap=
an's continuing gloomy economic outlook for the second month in a row in Fe=
bruary. In its monthly report, the BOJ cited deteriorating labor market con=
ditions and a worsening deflationary spiral as reasons for its pessimism. J=
uly-Sept real GDP revised to - 0.5% q/q (vs. prel -0.5%) Japan July Sept ca=
pital spending revised to up 1.6% q/q (prel up 1.1%) Japan Jan net foreign =
bond selling Y3.0712 trln yen (Dec Y827.1 bln selling) Foreigners' Jan net =
Japan bond selling Y1.2368 trln (Dec Y172.22 blne selling). Separately, a r=
eport in the Nihon Keizai Shimbun said that Standard & Poor's rating agency=
might change its ratings on Japanese government bonds unless Japan pushes =
through reform measures or starts exhibiting signs of a rebound. In the com=
ing days, FX traders will be listening for any comments that may emerge fro=
m President Bush's trip to Japan on February 17. Nihon Keizai Shimbun surve=
y showed that only balancing economic stimulus pared with structural reform=
s could bring the country out of recession. Only one out of three Japanese =
in a survey thinks that PM Koizumi will be able to implement reforms withou=
t sacrificing growth, employment. Japan is nervously trying to create the o=
utline of its comprehensive policy remedy to tackle inflation ahead of US P=
resident Bush's weekend visit to Japan. "The problem of deflation is an ext=
remely important issue in structural reform," Koizumi said and "the governm=
ent and the BOJ must tackle this together." Nihon Keizai Shimbun survey con=
ducted over the weekend announced that public approval for PM Koizumi plung=
ed to its lowest level of just 55% down 23 points from November due to rece=
nt firing of foreign minister Tanaka and prolonged economic slowdown. USD/J=
PY support is seen at 132.50, 132.20 and 132.0. Resistance is eyed at 134.0=
, 134.60 and 135.0. The pound soared nearly a full cent to a 3-week high o=
f 1.4346 against the dollar and climbed one-third pence to a 1-week high of=
.6111 against the euro, cheered by the larger-than-expected surge in UK RP=
IX to 2.6% y/y in January from the previous 1.9%, thereby breaking above th=
e Bank of England's 2.5% inflation target. The data suggests that as inflat=
ion rises because of strong domestic consumption, the BoE could begin raisi=
ng interest rates soon since it has the highest rate of growth among all th=
e G7 nations. Thus markets will be interested in seeing the BoE's quarterly=
inflation report due tomorrow for clues about its next monetary policy dec=
ision. The BoE Governor George said that January unexpected jump in inflati=
on was likely erratic and it should be around 2.5% Bank's ceiling around =
two years. His comments could dampen the market expectations of rate rise. =
George said that he could not say the rate hike is imminent, but he is prep=
ared to lower rates if needed. George also commented that the euro's levels=
are puzzlingly weak and he believed the single currency would strengthen i=
n near future. EUR/USD is trading around 87.60 underpinned by relief that=
Germany was not issued a formal warning about its budget deficit at the Eu=
rozone finance ministers' meeting. Both Germany and Portugal vowed to keep =
their budget deficits below the EU's 3% of GDP limit. Analysts noted that b=
ecause of the lack of a reprimand, Germany would not have to slash public s=
pending that would boost growthThe single currency was under slight downwar=
d pressure from reports that European telecom Carrier 1 was filing for bank=
ruptcy. Upside capped at 88.0, 88.50 and 89.0. Support holds at 87.0, 86.65=
and 86.40. Tomorrow's release of US retail sales is expected to show a d=
ecline to -0.3% in January from the previous -0.1% due to falling auto sale=
s. However, retail sales ex-autos are forecasted to rise to 0.4% in January=
from -0.1% in December helped by strong general merchandise and apparel sa=
les. This week's other major US economic releases include retail sales, jo=
bless claims, business inventories, import prices, PPI, industrial producti=
on and the University of Michigan confidence survey. Key Eurozone indicator=
s consist of the ECB monthly bulletin, Dutch GDP, French employment, French=
trade balance, French industrial production and Italian industrial product=
ion. Noteworthy UK data releases are the labor market report and the Bank o=
f England inflation forecast. Highlights from Japan comprise GDP, balance o=
f payments, industrial production and Tokyo department store sales. =09[=
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