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[IMAGE] Forums Discuss these points in the Forums: Forexnews Forum T= echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek= Technical Research Ltd. Charts & News featuring Standard & Poor's = Interest Rates US: Japan: Eurozone: UK: Switzerland: 1.75% 0.15% 3.= 25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] USD Rises Across the Board= on Fears Over Japan's Reforms February 19, 7:00 AM: EUR/$..0.8684 $/JPY..= 133.84 GBP/$..1.4247 $/CHF..1.7014 USD Rises Across the Board on Fears Ove= r Japan's Reforms by Jes Black At 8:30:00 AM US Jan Building Permits (exp = 1.6 mln, prev 1.654 mln) US Jan Housing Starts (exp 1.6 mln, prev 1.570 mln= ) USD added to its gains on Tuesday first against the yen, then against th= e European majors as dealers punished the yen for doubts about Prime Minist= er Koizumi's ability to reform Japan. USD/JPY rose to a one-week high of 13= 4.01 while EUR/USD briefly broke through chart support at 86.80 and fell to= a near two-week low of 86.66. GBP/USD also broke support at 1.4260 and fel= l to a one-week low of 1.4228. USD/JPY rose to a new one-week high of 134.= 01 as traders reacted to Japan's inability to tackle key reforms pledges. M= arkets grew weary with Japanese rhetoric on Tuesday after listening intentl= y last week to a number of assurances to shore up the financial system and = tackle deflation. The market was also disappointed by Japan's shying away o= n the injection of public funds into the troubled banking sector. This led = to a sell off in Mizuho Holdings, the world's biggest bank by assets, which= fell 7.36%. Earlier this month the banking sector encountered a sell off w= hich drove the Nikkei to 18-year lows until the Japanese government announc= ed it was ready to shore up the troubled sector. But there is a reason for= government apprehension. For instance, the more aggressively the governmen= t pursues the disposal of non-performing loans (NPL), the more it will incr= ease unemployment and deflation, thus depressing the economy even further i= n the short run. Therefore Japan will talk tough but likely take a less agg= ressive approach towards large institutions by again throwing money at the = problem. Instead of getting rid of all problem loans, which would bankrupt = many debtors, a kinder approach - like the bailout of the Daiei retail chai= n - will likely prevail. Although this is presumably not what Koizumi means= by tough reform, given his declining political capital, it is more likely = he will opt to rescue some key companies to avoid an unwelcome surge in job= lessness. The end result is a lose/lose situation for JPY, thus the sell of= f seen today. However, USD/JPY gains were constrained by repatriation flow= s back to Japan ahead of the March 31 book closing. Precisely because of tr= oubled banks and indebted companies are forced to shore up their books ahea= d of the fiscal year end. Afterwards, the yen is likely to come back under = pressure as Japan begins to tackle deflation and prevent a financial crisis= . But how they plan to do this remains unclear. USD/JPY support is seen at = 133.70, 132.65 and 132.35. Resistance is seen at 134.00 and 135.00. EUR/US= D fell to a day's low of 86.66 after breaking the 86.80 level which marks t= he 50% retracement of the 85.63 to 88.03 move. Follow up support is seen at= 86.50, which is the 61.8% retracement of the same move. A break of that le= vel would likely send the euro back to February's 6-month low of 85.63. Mea= nwhile, failure to regain the key 87.40/50 mark will likely keep pressure o= n the pair after it rebounded from last week's lows but met with heavy resi= stance at 87.46. The euro rebounded from a day's low of 86.66 following a = positive reaction to E12 December industrial production which rose as expec= ted by 0.8%. Although the year on year rate was still down 4.1%, the data a= ppears to have marked a turnaround for the troubled manufacturing sector, w= hich is bullish for the euro. German think tank Ifo's Sinn also raised ey= ebrows when he said that the EU's prediction for Germany's deficit was too = harsh. This indicated that Germany may not face censure by the EU later thi= s year for breaking the 3% debt/GDP ratio set out by the Maastrict treaty. = GBP/USD slipped to a new one-week low of 1.4228 after breaking last week's= low of 1.4250. On Monday, cable bounced up to an overnight high of 1.4330 = but failed to break key resistance around1.4340/50, which marks the 61.8% r= etracement of the move from 1.4515-1.4040 and has so far provided tough res= istance. Without a break of that level, the pair remains heavy, dealers say= . A break of support at 1.4250 seen targeting support at previous resistanc= e levels of 1.4235 and 1.4180. Today's verbal intervention in the interest= rate market by the Bank of England's George surprised markets but did not = weigh on the pound. George sought to quell speculation that UK interest rat= es are set to rise sharply this year, as the futures market is pricing in a= rise from 4% to 5%, which is quite aggressive considering the weak inflati= onary environment. By doing so the BoE is saying the futures market overrea= cted and that interest rates are not likely to rise substantially this year= . A rise in wholesale price figures from Germany also had little reaction= in the market as inflationary pressures are benign. Meanwhile, housing st= art data from the US today is unlikely to affect markets, which will contin= ue to focus on earnings news and any further fallout from the Enron affair.= Omnicom Group Inc., the world's third-largest advertising company, said on= Tuesday its fourth-quarter earnings rose 15 percent, despite the advertisi= ng slump that has besieged the sector for the past year. S?futures trading = down 7, Nasdaq futures trading down 18 points. =09[IMAGE] Audio Mkt. Anal= ysis JPY, EUR rebound vs USD Articles & Ideas GBP: Old Lady Faces Ol= d Problem Euro Rally Running Out of Steam Articles & Ideas Forex Gl= ossary Economic Indicators Forex Guides Link Library [IMAGE] =09 =09=09[IMAGE][IMAGE] [IMAGE][IMAGE]=09 =09=09 This e-mail is never sent unsolicited. If you wish to unsubscribe f= rom this or any other Forexnews.com newsletters, please click here . Any = opinions expressed by representatives of Forexnews.com or its affiliates as= to the commentary, market information, and future direction of prices of s= pecific currencies reflect the views of the individual analyst, and do not = necessarily represent the views of Forexnews.com or its affiliates in any w= ay. In no event shall Forexnews.com or its affiliates have any liability fo= r any losses incurred in connection with any decision made, action or inact= ion taken by any party in reliance upon the information provided in this ma= terial; or in any delays, inaccuracies, errors in, or omissions of informat= ion. =09
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