Friday November 4, 2005 - 09:10:20 GMT
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CMC Markets - www.cmcmarkets.com
Yen remains exposed on downside as Dollar tests new 2 year highs.
November 4th - Despite the presence of some positive economic data from Japan in recent trade – household spending showing its first increase in six months – the Yen continues to race lower against the dollar. Numbers released from the US yesterday are certainly suggesting that any slowdown in the economy should prove short-lived and this is being reinforced by another rally in oil prices as the market accounts for higher demand as we move on into the winter. Today’s non-farm payrolls will likely prove critical and if the number fails to come in line with the forecast increase in the 100-150k region, then the greenback may find itself under a degree of pressure. However ahead of this there are two key factors to consider – higher oil prices and higher US interest rates – and these are set to combine and push USD JPY further towards that 120 level in the near term. Comments have been mooted at the BoJ in recent days that suggest interest rates in Tokyo will start to climb in the next six to twelve months. Any sustained run of Yen selling is therefore likely to find support both on the technicals and fundamentals eventually, but for the time being the JPY remains exposed on the downside.
Paul Jackson and Enis Mehmet
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