Tuesday March 1, 2005 - 11:10:18 GMT
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FOREX: US OPEN MARKET POINTS 03-01-05
Yen on a Roll While Euro Continues to Stumble
Good news comes in batches and for Japan the news continues to be positive. Tonight’s unemployment and Household spending reports confirm that last night surprisingly strong data was not a one-off event and suggest that Japan’s economic slowdown is over.
Japan reported tonight that unemployment rate remained near yearly lows registering only 4.5%. More importantly average hours worked per week jumped from 40 to 42 demonstrating strong underlying demand. Additionally, Household Spending which has declined for the past two months staged an impressive rebound gaining 2.6% on a month to month basis – the best performance since May of 2004. The good news even emboldened BOJ Governor Fukui to note that the country’s ultra-accommodative monetary policy will not last for much longer. Mr. Fukui declined to provide specifics, but the fact that he was even willing to express such sentiment indicates the degree of confidence amongst Japanese policymakers.
Meantime in Europe the news is far more mixed. Manufacturing PMI surveys perked up slightly with Italy’ s finally reaching above 50 level at 50.6. France, too, showed a small improvement from 52.7 last month to 53.2 in February. Germany, however, which is the region’s largest yet sickest economy, saw the PMI numbers drop slightly to 52.2 from 52.4. The country also reported another month of record unemployment as 161K more Germans joined the jobless rolls versus expectations of 80K. German unemployment now stands at 11.7% - the highest rate since World War II.
However, as has recently been the case, the euro ignored the bad news and even rallied a bit, rising above the 1.3200 figure in Europe after hitting session lows of 1.3170 in Asia. According to IFR markets, dealers report strong demand from the Russian Central Bank which has been on the bid for most of the week and may explain why buying EUR/USD on the dips was the best trade to make for the past few days. The Russians, who are vigorously expanding their trade activities with the EZ, may feel it necessary to diversify their reserves for that purpose. But once they’ve acquired their quota the question remains – who will bid the euro higher if the economy continues to sour?
FX Spot Overnight
- EUR rallies above 3200 despite soft data
- JPY stays at 104.25 as eco data confirms strength
- GBP above 9200 figure on strong credit demand
- CHF hovers at 1600
- 11:00GMT – (06:00 AM EST) GBP CBI Distributive Trades Report Jan Expected -- Previous -3
- 13:30GMT – (08:30 AM EST) CAD Industrial Product Price Index m/m Jan Expected 0.4%Previous 0.3%
- 13:30GMT – (08:30 AM EST) Raw Material Price Index m/m Jan Expected 2.0%Previous -4.3%
- 14:00GMT – (09:00 AM EST) SVME-Purchasing Managers Index Feb Expected 52.1Previous 51.7
- 14:00GMT – (09:00 AM EST) Bank of Canada Rate Decision Expected 2.50%Previous 2.50%
- 15:00GMT – (10:00 AM EST) Construction Spending m/m Jan Expected 0.4%Previous 1.1%
- 15:00GMT – (10:00 AM EST) ISM Manufacturing Feb Expected 57.0 Previous 56.4
- 15:00GMT – (10:00 AM EST) ISM Prices Paid Feb Expected 67.5 Previous 69.0
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