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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] BoJ Gives Into Government = Pressure, JPY Falls In Dismay February 28, 7:00 AM: EUR/$..0.8645 $/JPY..1= 34.15 GBP/$..1.4153 $/CHF..1.7059 BoJ Gives Into Government Pressure, JPY = Falls In Dismay by Jes Black At 8:30:00 AM US Jobless Claims (exp 370k, pr= ev 383k) US Q4 Final Sales (exp 1.8%, prev 1.7%) US Q4 GDP q/q prel (exp 0.= 8%, prev 0.2%) At 9:00:00 AM US Feb New York NAPM (exp n/f, prev 243.6) At = 10:00:00 AM US Feb Chicago PMI (exp 47.2, prev 45.1) The dollar traded in= a tight range against the European majors on Thursday as markets digested = Fed Chairman Greenspan's guarded optimism and awaited key economic data fro= m the US. Meanwhile, the yen was little changed from the Bank of Japan's de= cision to increase its outright JGB purchases to one trillion yen a month f= rom 800 billion, but it did fall in afternoon London trade as dealers saw l= ittle hope in the anti-reform package presented overnight. Today's econom= ic data is expected to underpin Greenspan's outlook. Markets expect a healt= hy revision to Q4 '01 GDP to 0.8%-1.0% from the advanced reading of 0.2%. S= tronger spending and a fall in the trade deficit are credited for the incre= ased optimism. Later in the morning, traders will assess the Chicago PMI fo= r insight to the ISM's PMI on Friday. Chicago PMI is forecasted to rise to = 47.7 in February compared with the previous month's 45.1 as conditions in t= he Midwest manufacturing region continue to improve. Weekly jobless claims = are expected to decline to 370k from 383k. Despite the upbeat forecasts, t= oday's Enron hearings could keep the dollar under wraps as investors contin= ue to look at stock market valuations with skepticism. Data from the Eur= ozone showed a jump in CPI to 2.7% in January from 2.7%. This was slightly = higher than the 2.6% forecasted. Economists expect the figures to keep inte= rest rate policy steady at the European Central Bank, which holds its next = rate review meeting next week. Supporting this view was evidence that Euroz= one M3 rose on a 3-month basis to a high of 8% from 7.8%. The ECB also watc= hes M3 as part of their inflation outlook, but has long said M3 poses no re= al price risks. Recent comments suggest we are likely to see steady monet= ary policy from the Fed, ECB and BoE for some time to come. At next week's = Fed meeting, Greenspan is likely to keep the easing bias to avoid the probl= em BoE Governor George ran into with markets driving yields higher on overz= ealous expectations of rate hikes. EUR/USD maintained in a tight range aro= und 86.40 after dropping overnight to a 3-week low of 86.27 before again te= sting resistance around 86.60 in today's session. Sentiment is again turnin= g bearish, but only a move through 86.30/15 on its way to 85.63 low would p= ut the euro back in full bear mode. Support is seen at 86.30, 86.15, and 85= .60. Resistance is viewed at 86.60, 87.10, and 87.85. GBP/USD broke below = support at 1.4180 after and revisted an overnight 2-week low around 1.4150 = after BoE Governor George today tried again to talk down the currency. Geor= ge said sterling strength exacerbates the imbalances the central bank would= like to correct. Therefore, a fall would help the BoE do its job to get th= e economy on one track again. Usually central bankers like a strong curren= cy because it allows for lower interest rates and flexibility on monetary p= olicy. But with RPIX running near their target of 2.5%, George appears more= concerned with the UK's two-speed economy. He repeated that "unbalanced gr= owth better than no growth" for the UK, but warned that there is a risk tha= t consumer spending could moderate sharply. Therefore, sterling remains wea= k after back-to-back surprise declines in UK retail sales were seen as a si= gn that consumer spending could have peaked last year, which stands in shar= p contrast with the upbeat outlook for the US. Although risks to a sharp fa= lloff in consumer spending worry the BoE and markets, the proactive stance = of the MPC pleases the market more than the conservative approach of the EC= B. EUR/GBP was little changed around 61 pence. Yesterday's downward revisi= on to UK GDP showed the economy was flat in Q4, down from a preliminary est= imate of 0.2% growth. The revision caught traders off guard, but did not pr= ovoke a break of key support at 1.4140. Follow up support is viewed at 1.41= 0 and 1.4075. Upside capped at 1.4260, 1.430 and 1.4345. Meanwhile, USD/JP= Y fell to a day's low of 133.57 in early London trade amid profit taking af= ter encountering strong resistance around the 135 area overnight and a rema= rk from Japan's top financial diplomat that the dollar was unlikely to drop= sharply. Repatriation concerns also limiting dollar gains, but with repatr= iation poised to slow near the end of March and net outward investment to r= esume thereafter dealers expect to see further yen weakness in the weeks to= come allowing USD/JPY to target 140 once the 135.00/20 major resistance ba= nd is broken. Upside capped at 134.70/85 and strong resistance at 135.15. S= upport holds at 133.50, 133.20, 133.0 and 132.50. The Bank of Japan's deci= sion to increase its outright JGB purchases to one trillion yen a month fro= m 800 billion also had an initial supportive effect as it was seen easing f= unding pressures next month. But the yen's gains evaporated as markets saw = little hope in the Japanese government's anti-deflation package. The yen s= hould not fall too much from the increase in liquidity even though it is su= pposed to mean a weaker yen because there is more of the currency circulati= ng. Instead, since increasing liquidity in Japan is ineffectual amid struct= ural barriers causing rampant deflation and lack of demand the yen has resp= onded less and less to recent increases in liquidity, because it is not lea= ding to inflation and therefore not diminishing the value of the yen. Desp= ite BoJ Governor Hayami's remark that today's easing was not politically mo= tivated, Hayami has made public his desire now for the government to inject= public funds into the troubled banking sector. Whether there was a quid pr= o quo agreement remains to be seen. PM Koizumi's anti-deflation package avo= ided any concrete plan to rescue banks but Hayami worries that without a re= capitalization Japanese banks will be threatened with losing international = banking licenses because their capital ratios have fallen to below internat= ional standards. Government has tried to avoid a publicly unappealing tax = payer fund injection, instead opting for creating a floor under asset price= s which will keep banks capital adequacy ratios above the 8% limit set by t= he BIS. But an injection of funds would allow banks to write off non-perfor= ming loans and improve their balance sheets. Therefore, the government's pl= an is seen as a muddle through and more risky for the markets. =09[IMAG= E] Audio Mkt. Analysis USD Tempered by Greenspan's Cautiousness Artic= les & Ideas Goodbye Hope, Sayonara Yen Will Greenspan & Data Overcome En= ronitis? Articles & Ideas Forex Glossary Economic Indicators Fore= x 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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