Japanese Preview

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Interest Rates US: Japan: Eurozone: UK: Switzerland: 2.5% 0.15% 3.7=
5% 4.5% 1.75-2.75% [IMAGE] =09 [IMAGE] Japanese Forex Trading Prev=
iew October 23, 7:00 PM: EUR/$..0.8902 $/JPY..122.55 GBP/$..1.4253 $/CHF..=
1.6599 Japanese Forex Trading Preview by Darko Pavlovic At 1:30:00 AM Jap=
an Sept Dpt. Store Sales (exp n/f, prev -0.3%) At 12:30:00 AM Japan Sept Su=
permarket Sales (exp n/f, prev -5.2%) The dollar reached a two-month high =
vs. the yen of 123.03 but later in the trading pared its gains and is tradi=
ng around 122.60 yen after newly reported anthrax cases. The yen weakened v=
s. the dollar after government survey released overnight showed Japanese co=
nsumer confidence tumbled 4 points to its lowest level in three years to 36=
.9 in September, amid negative perceptions regarding employment and income.=
In addition, the yen fell against the dollar and euro after a statement by=
Toyota VP Araki that the firm plans to exchange almost $20 billion worth o=
f cash reserves from yen into other currencies in order to increase investm=
ent outside of Japan. A Toyota spokesman later stated that the reserves cou=
ld vary depending on Toyota's investment plans. However, such a large trans=
action would further weaken the yen. The Finance Ministry revealed that tra=
de surplus fell 43% in the first half of this compared with the same period=
last year, due to fluctuations in the business cycle and increased strengt=
h in other Asian countries. Also supporting the falling trade surplus is de=
cline of the US economy, the biggest Japan export partner. The ruling party=
in Japan is planning to propose a plan to strengthen the role of the Resol=
ution and Collection Corp. held up over the time limit of bad loans disposa=
l: LDP is pressing for three years limit while Komeito party has advocated =
for five years deadline. Support stands at 122.45, 122.27 and 121.87. Upsid=
e capped at 123.30, 123.50 and 123.85. The single currency benefited from=
more anthrax scare in the US, rising form a six-week lows to $0.8900 in sp=
ite of further decline in euro zone economies. Italian business confidence =
fell to its lowest level since 1962, to 84 in September from the previous 9=
6. Also the euro was undermined by flow in insurance payments from European=
insurers to the US after the September 11 attacks. Traders are likely to s=
ell the euro ahead of Thursday's ECB meeting because of its apparent reluct=
ance to cut rates by 25-bp to shore up growth in the flagging European econ=
omies. But today's release of preliminary inflation from Germany and Italy =
indicated that price pressures are easing and will therefore give the ECB f=
lexibility to reduce rates before the end of the year. Data from 3 German s=
tates suggested that the national inflation rate is falling towards the ECB=
's 2.0% target, while data from Italian cities suggested the overall Italia=
n inflation rate is on course to slip to 2.5% in October from the prior mon=
th's 2.6%. Resistance is seen at 89.20, 89.55 and 89.80. Support is viewed =
at 88.60, 88.20 and 87.80. The swiss franc fell vs. the dollar but later r=
ecovered due to anthrax after the European Union defined limits on the use =
of Swiss financial aid to bail out SwissAir in accordance with the EU's tra=
nsportation agreements. Overnight, the Swiss franc plunged to a new 6-week =
low of 1.6682 as markets mulled the Swiss franc's image of safe heaven curr=
ency that was tarnished by the SwissAir insolvency. Any subsequent apprecia=
tion in the Swiss franc arising from safe-haven flows will likely expedite =
further rate cuts. The SNB has already eased rates twice to around 2.25%, a=
nd economists forecast another 50-bp reduction in store before December to =
bring its target rate down to 1.75%. Support is seen at 1.6565 and 1.6525. =
Upside capped at 1.6640, 1.670 and 1.6740. The White House's Hubbard note=
d that it is too soon to say that the US economy is in a recession, even th=
ough Q3 and Q4 GDP are "particularly adversely affected" by the September 1=
1 attacks which could have a potential long-lasting effect on business and =
consumers. Therefore, while the probability of a US recession has risen "su=
bstantially" since the attacks, Hubbard tempered his statement by remarking=
that any US economic downturn will likely be "quite modest". US stocks ret=
reated from positive territory after news of more anthrax cases, sending th=
e Dow down 36 points to 9340 and NASDAQ down 3 points to 1704. =09[IMA=
GE] Audio Mkt. Analysis Dollar Gives Back Gains After More Anthrax Ar=
ticles & Ideas The US Dollar: Before and after the Crisis EURO: German I=
FO Will Remind ECB to Build Growth Articles & Ideas Forex Glossary =
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