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 Pr=
eview February 13, 7:00 PM: EUR/$..0.8712 $/JPY..132.98 GBP/$..1.4285 $/CH=
F..1.700 Japanese Forex Trading Preview by Darko Pavlovic At Japan Dec C=
urrent Account (exp 730 bln, prev 1125 bln) At 11:30:00 PM Japan Dec Ind p=
rod. m/m (exp 2.1%, prev -1.7%) The dollar slightly eased vs. the yen, tr=
ading around 133.00, off from its highs in New York trading of 133.45, boos=
ted by strong US retail sales and more warnings to Japan from rating agenci=
es. US retail sales (core) posted its largest increase since March 2000 and=
excluding autos soared 1.2% in January from the previous revised 0.7%, hig=
her than expected rise of 0.4%. Accounting for the majority of the gain in =
core retail sales was a 5.1% surge in gasoline sales in January from the pr=
evious revised -3.2%, marking its steepest rise since February 2000. The ye=
n was hurt after Moody rating agency announced it might lower Japan's gover=
nment domestic rating by up to two notches from the current Aa3. Yesterday,=
Standard & Poor's said that it was considering changing its rating on Japa=
n's debt unless Japan showed clear progress in structural reform and econom=
ic recovery. Japan Dec unadjusted current account surplus rose 42% from a y=
ear earlier to 971.8 bln yen. The current account surplus for 2001 fell 12%=
from the previous year at 11.06 trln yen, while trade surplus for the year=
plunged 32% to 8.52 trln yen. Currency markets will be listening for any c=
omments that may emerge from President Bush's trip to Japan on February 17.=
Rumors are circulating that Japanese authorities may announce at that time=
a bail out package for Japan's banks, especially in light of the recent wa=
rnings by Moody's and S?of further downgrades. In its February economic rep=
ort the government said that "the Japanese economy continues to deteriorate=
", keeping its general economic assessment unchanged for the third straight=
month. The assessment was unchanged in the areas of private consumption an=
d capital spending while estimation for industrial production was upgraded.=
PM Koizumi asked his economic ministers to draw up a comprehensive package=
of measures to fight deflation. . The BoJ Governor Hayami said that Japan'=
s financial system remains stable and central bank will take action if nece=
ssary, but there is no need to increase government bond purchases now. Resi=
stance is eyed at 134.0, 134.60 and 135.0. Support is seen at 133.0, 132.50=
and 132.20. EUR/USD fell to one-third cent to a 2-session low of 87.08, =
due to unexpected rise in US retail sales and market expectations that the =
US economy is getting out of recession faster than the European one. ECB Vi=
ce President Christian Noyer said that the single currency is extremely und=
ervalued vs. the dollar and could strengthen without damaging European econ=
omies, but his remarks had no impact on the euro. Upside capped at 88.0, 88=
.50 and 89.0. Support holds at 87.0, 86.65 and 86.40. Tomorrow's release o=
f US business inventories is likely to show a slight improvement to -0.5% i=
n December from the previous month's -1.0%, helped by a rise in retail inve=
ntories to -0.2% from the previous -1.0%. The change in inventories is seen=
to bring down Q4 GDP from its preliminary reading of 0.2% q/q. Meanwhile, =
import prices are expected to rise to -0.1% in January from -0.9% in Decemb=
er, due to increasing oil prices. This week's other major US economic rele=
ases include jobless claims, PPI, industrial production and the University =
of Michigan confidence survey. Key Eurozone indicators consist of the ECB m=
onthly bulletin, German retail sales, Dutch GDP, German CPI and HICP, Frenc=
h employment, French trade balance, French industrial production and Italia=
n industrial production. Highlights from Japan comprise the balance of paym=
ents, industrial production and Tokyo department store sales. =09[IMAGE]=
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