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Forex Market UpdateTrichet repeats G7 concerning the appreciation of Asian currencies!
It was quiet Asian trading session with not much data to give the market some intra day volatility. But the JPY crosses remains strong throughout the session
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€¢ Japan's corp service price (yoy) March, out at -0.2% vs. 0.0% expected.
â€¢ In Japan, Tanaki made comments that there has been some rapid moves in the FX market after last Friday's G7 finmin meeting in Washington. USDJPY level should reflect economic fundamentals and rapid moves are undesirable.
â€¢ ECB's Trichet said the potential rate of euro zone is "close to" and "above" 2% and that the growth potential could get a boost of "at least 0.75%" if euro zone governments delivered on necessary structural reforms. The ECB last forecast in March that the euro zone would grow 2.1% this year.
â€¢ ECB's Trichet also repeated G7's call for appreciation of the YUAN and other Asian currencies. "We must have an increasing dynamism of domestic demand and the orderly and appropriate changes in the exchange rate. I am not speaking of China along; I am speaking of the full body of emerging Asia, which I see in the same situation," Trichet said in a Q&A after giving a speech to the Council of Foreign Relations in New York Monday.
THEMES TO WATCH â€“ UPCOMING SESSION
The theme from this weekendâ€™s G7 meeting continued throughout Mondayâ€™s trading sessions with not much data to change the present stronger JPY theme. This will likely change today as the market will focus on the US data out today at 15:00 GMT. There is significant focus on the fragile US housing market right now so a less than expected US data could be the excuse to send EURUSD above 1.2415 which will likely ignite more buying interest for a test of 1.2590, the old top from October 2005
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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