Monday February 28, 2005 - 09:55:19 GMT
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CMC Markets - www.cmcmarkets.com
Upbeat Japanese trade data boosts Yen; greenback remains exposed on the downside.
February 28th - The dollar has been subjected to further selling across the board in early trade as high oil prices and upbeat Japanese economic data combined to weigh on the greenback. Industrial production in Japan came in at over 2 percent in January, comprehensively beating expectations of a 1.5% increase and there’s also been a marked upturn in Japanese retail sales. Consumer spending is now up to 2.2% year on year and if this continues, at some point the prospect of a tightening of monetary policy by the Bank of Japan will once again come into play. Whilst it’s probably too early to state categorically that this is the much-awaited turning point in the country’s economic recovery – especially with high oil prices set to maintain pressure on input costs – its certainly good news and any expansion in Japanese demand may indeed help close the US trade gap. US personal income and spending data due for release later in the session could serve to offer USD JPY further direction in the near term, although current market consensus does seem to be that after last week’s run of Yen appreciation, the currency pair will remain largely range-bound between 104 and 106.
Chris Callander and Enis Mehmet
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