Wednesday October 12, 2005 - 11:32:07 GMT
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Black Swan Capital - www.blackswantrading.com
•Bank of Japan Governor Toshihiko Fukui said on Wednesday the BOJ was entering a critical period for deciding an end to its super-easy monetary policy, adding to speculation it could drop the framework in the first half of next year. (Reuters)
•Key reports due today (Global-View.com):
JPN- BOJ Monetary Policy meeting - - Day 2
07:30 GMT- UK- Aug Employment
“A Japan that once again contributed to growth would be stellar news for Asia, particularly at a time when this region wants to reduce reliance on the U.S. And given the skepticism over Japanese recoveries, it's not clear all this has been sufficiently factored into Asia's outlook.”
William Pesek Jr.
As the crowd (us included) optimistically waxes on over the prospects of Japanese economic growth, the country’s currency wanes against the dollar. Is this a divergence we should play?
Are we seeing this the “wrong” way? Maybe a growing Japan, measured by a rising stock market (Nikkei), means a weak yen? Or maybe it is another false dawn for Japan? Or does it indicate that Japanese domestic and international investors are willing to take on more risk and move their money offshore in search of better yield—but the ball game changes when the Bank of Japan gets back in the line up? Or does it represent one or two or three of a possible hundred things we don’t see?
US Treasury Secretary Snow and Fed Chairman Greenspan are touring Asia this week. We are hearing the usual “set the yuan free” sound bites from Mr. Snow. But analysts expect the Chinese to have translation problems this week. However, in light of a growing Japanese economy i.e. another engine of growth in the region, and a potentially strong one kicking into gear, doesn’t it make sense that China would be more willing to ponder yuan freedom? We don’t know. We just ask the questions, unfortunately.
Chart: USDJPY Weekly
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