Friday April 8, 2005 - 09:23:55 GMT
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FOREX:US OPEN MARKET POINTS 04-08-05
Yen Rising From the Ashes?
Although one could hardly tell by the price action, the good news of the night came out of Japan where Machine Orders for February registered a healthy jump to 4.9% vs. 2.7% expected indicating that Capital Investment may underpin the Japanese recovery going forward. Additionally, the Eco Watchers survey rose to 49.5 from 45.6 - within a whisper of the critical 50 expansionary level. Long time readers know the importance we attach to this “man-in the-street” survey as a true snapshot of the state of the Japanese economy. Looking deeper into the numbers we see that Retail enjoyed a strong gain to 46.5 from 42.3 suggesting that higher oil prices may not be having as adverse an impact on the Japanese economy as FX market had feared.
There is nothing wrong with the Japanese economy that oil below $50/bbl will not cure. As crude prices finally recede from their all time highs, perhaps next week will bring a series of better news for both the economy and the country’s currency. The yen has not really responded to tonight’s positive data stubbornly holding at 108.70 and FX traders may need to see crude below $50/bbl before seriously bidding for the currency. However as USD/JPY approaches major resistance at the 110 level we feel that the pair is more likely to retrace rather than continue upward, unless oil barrels through the $60 handle, at which point all bets are off.
Meanwhile in the Euro-zone the EUR/USD continues to consolidate at the 1.2800 figure. Yesterday’s drop in crude provided some support for the greenback and the pair quickly lost the 1.2900 level in New York trading. Tonight the German Current Account data printed slightly better at 13.5B vs. 12.8B expected but the rise wasn’t due to the growth in exports but rather a sizable –3.7% decline in imports. Overall, with the barren US calendar for the day we may see dollar bulls try to press the stops at the 1.2800 figure especially if oil declines further, but the session is expected to be rather quiet, in marked contrast to last Friday’s gyrations.
FX Spot Overnight
- EUR testing support at 2800
- JPY better numbers but JPY stays weak at 108.70
- GBP all the way below 8700 as the effect of yesterday’s weak data sinks in
- CHF shadows euro trading at 2100 figure
- 11:00 GMT – (8:00 AM EST) CAD Unemployment Rate Mar Expected 7.0% Previous 7.0%
- 11:00 GMT – (8:00 AM EST) CAD Net Change in Employment Mar Expected 25.0K Previous 26.6K
- 12:15 GMT – (8:45 AM EST) CAD Housing Starts Mar Expected 222.5K Previous 214.9K
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