Current policy claims to appreciate Japanese Yen further as BoJ

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Fundamental Forecast for Japanese Yen: Bullish

The Japanese Yen continued to appreciate against its U.S. counterparts as positive real interest rates in Japan increases the appeal of the low-yielding currency, and we may see the USDJPY track lower in the week ahead should the Bank of Japan preserve its current policy in July. Indeed, the BoJ is widely expected to uphold its zero interest rate policy, and there’s speculation that the central bank will continue to carry out its current asset purchase program as the board raises its outlook for the region.

Indeed, the BoJ raise its fundamental assessment of all the nine regions for the first time since October 2009 while presenting the quarterly Sakura Report and it seems as though the central bank will stick to its wait-and-see approach as economic activity starts picking up. Although Governor Masaaki Shirakawa maintained his pledge to purse ‘powerful monetary easing,’ it seems as though the central bank is becoming more upbeat towards the economy as the recent developments coming out of the world’s third-largest economy raises the prospects for future growth. Meanwhile, the Nikkei newspaper said that the BoJ may scale back on its 6-month operation and expand its shorter-term programs, but the central bank may see scope to inject additional liquidity into the system as the ongoing turmoil in Europe dampens the outlook for the world economy. BoJ Deputy Governor Hirohide Yamaguchi held a cautious tone while speaking in Tokyo earlier this week and said that excessive gains in the local currency would dampen private sector activity, and we may see the central bank try to talk down the Yen as it lowers the scope for an export-led recovery.

As the USDJPY threatens the ascending channel carried over from June, a close below the 20-Day SMA (79.56) would instill a bearish outlook for the pair, and the dollar-yen may continue to give back the rebound from 77.65 as the relative strength index fails to maintain the upward trend from the previous month. However, we may see the dollar-yen face sideways price action ahead of the rate decision as market participants weigh the outlook for monetary policy, and the outcome of the rate decision should generate a clearer picture for the USDJPY amid the mixed views surrounding the BoJ. - DS

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Current policy claims to appreciate Japanese Yen further as BoJ

Fundamental Forecast for Japanese Yen: Bullish
The Japanese Yen continued to appreciate against its U.S. counterparts as positive real interest rates in Japan increases the appeal of the low-yielding currency, and we may see the USDJPY track lower in the week ahead should the Bank of Japan preserve its current policy in July. Indeed, the BoJ is widely expected to uphold its zero interest rate policy, and there’s speculation that the central bank will continue to carry out its current asset purchase program as the board raises its outlook for the region.
Indeed, the BoJ raise its fundamental assessment of all the nine regions for the first time since October 2009 while presenting the quarterly Sakura Report and it seems as though the central bank will stick to its wait-and-see approach as economic activity starts picking up. Although Governor Masaaki Shirakawa maintained his pledge to purse ‘powerful monetary easing,’ it seems as though the central bank is becoming more upbeat towards the economy as the recent developments coming out of the world’s third-largest economy raises the prospects for future growth. Meanwhile, the Nikkei newspaper said that the BoJ may scale back on its 6-month operation and expand its shorter-term programs, but the central bank may see scope to inject additional liquidity into the system as the ongoing turmoil in Europe dampens the outlook for the world economy. BoJ Deputy Governor Hirohide Yamaguchi held a cautious tone while speaking in Tokyo earlier this week and said that excessive gains in the local currency would dampen private sector activity, and we may see the central bank try to talk down the Yen as it lowers the scope for an export-led recovery.
As the USDJPY threatens the ascending channel carried over from June, a close below the 20-Day SMA (79.56) would instill a bearish outlook for the pair, and the dollar-yen may continue to give back the rebound from 77.65 as the relative strength index fails to maintain the upward trend from the previous month. However, we may see the dollar-yen face sideways price action ahead of the rate decision as market participants weigh the outlook for monetary policy, and the outcome of the rate decision should generate a clearer picture for the USDJPY amid the mixed views surrounding the BoJ. - DS

>> Rise in German Unemployment Further Discourages Euro Investors

The Takeaway: Germany unemployment increases 19 k, despite expectations for autumn 10 K-> positive labour said that the trend of the market were outweighed by slowing of the economic-> Euro drops dynamic as weak Manufacturing PMI also comes
Unemployment increased unexpectedly in April by a people of 19 000 seasonally adjusted to 2.87 million. The rise in unemployment is much greater than the expectations of analysts, for the rate of fall by 10,000 people. According to Nuremberg on the Federal Labour Agency, the current unemployment rate now stands at 6.8%, compared to 6.7% in March.
The positive trend on the labour market was offset by the loss of momentum in the economy, according to the Federal Labour Agency President Frank - Juergen Weise.
The weak employment data were released at the same time that the German PMI manufacturing survey came in lower than expected. High unemployment will generally not be consumer spending and drag down economic growth, and signs of this morning of a slowdown in the economy are because of anxiety over the European debt crisis.

EUR/USD has been a free fall in the half hour before the figures of unemployment, as weaker that expected data PMI came Italy and France. The Euro continued to weaken after release of employment, to the low 1.3155 last week.

Asian Market Update: China home prices dip further in Feb;

CN) CHINA FEB HOME PRICES FELL M/M IN 45 OF 70 CITIES V 47 PRIOR; NEW HOME PRICES FELL M/M 27 OF 70 CITIES - update
- (UK) UK MAR RIGHTMOVE HOUSE PRICES M/M: 1.6% v 4.1% PRIOR (3rd consecutive m/m increase); Y/Y: 2.2% v 1.4% PRIOR (highest since Oct 2010)
- (NZ) NEW ZEALAND FEB PERFORMANCE SERVICES INDEX: 55.5 V 53.8 PRIOR
- (NZ) NEW ZEALAND Q1 WESTPAC NZ CONSUMER CONFIDENCE: 102.4 V 101.3 PRIOR
- (KR) SOUTH KOREA FEB DEPARTMENT STORE SALES Y/Y: 2.9% V -4.1% PRIOR; DISCOUNT STORE SALES Y/Y: -6.4% V 2.7% PRIOR
***Markets Snapshot (as of 04:3ahh
]0GMT)***
- Nikkei225 +0.3%
- S&P/ASX +0.5%
- Kospi +0.4%
- Taiwan Taiex -0.1%
- Singapore Straits Times +0.4%
- Shanghai Composite -0.3%
- Hang Seng +0.3%
- S&P Futures +0.2% at 1,402
- Spot gold +0.1% at $1,661/oz
- May Crude +0.1% at $107.36
***Overview/Top Headlines***
- Markets continued to cautiously ride the wave of global economic recovery. US Treasuries fell for the 9th day, 10-year Aussie govt bonds tipped 4.29%, above the benchmark rate of 4.25%. AUD/USD bounced higher from Friday to $1.0585 level, NZD also shifted higher on stronger consumer confidence data. The majors all continued to see strength against the yen, moves were modest but persistent with the return of the carry trade. China's major property names like Vanke, led the Shanghai Composite lower after China recorded new home prices falling in 27 out of 70 cities, total home prices fell in 45 out of 70 cities. Prices of new and existing homes in Shanghai and Beijing fell moderately, marking several consecutive months of decline. IMF's Zhu's said that Japan has very high debt and it will be unsustainable and they need to come up with a fiscal plan to address debt. Zhu also said that global growth rates slowing and risks are still to the downside despite some improvement. Zhu emphasized that it is very important for China to rebalance it's economy. The Korean Won gained against its cross after an improvement in department store sales. Oil prices continued to gain with Saudi crude production nearing record high levels at 9.87M bps in January.
***Speakers/Geopolitical/In the press***
- (AU) Reserve Bank of Australia (RBA) Gov Stevens: Monetary policy can play a role in stimulating demand if inflation will allow >- (CN) PBoC Deputy Gov Du Jinfu: China needs to further cut RRR
- (AU) Australia's Jobs Minister Shorten: Rate cut would help jobs; Strong A$ is challenging for policy and hurting employment
- (CN) China National Bureau of Statistics Head Ma Jiantang: China must strengthen reforms to ensure economic growth continues - Chinese press
- (JP) Ruling DPJ still struggling to win enough support to raise consumption tax; PM Noda may have to dissolve Diet and call snap elections - Nikkei News
- (CN) China March new yuan loans may be CNY800B v CNY711B in Feb - Chinese press
- (JP) Japan and 12 other Asian nations may double regional currency swap from the current $120B - Nikkei News
- IMF's Lagarde: High levels of debt and rising oil prices still present risks to global economy despite signs of stabilization in the eurozone; Possible for Yuan to become reserve currency in the future
***Equities***
- GNS.AU: Has completed the first stage of a sale of the Gunns Green Triangle forest estate, with funds managed by New Forests Pty Ltd taking a controlling interest - The Australian
- Rusal, 486.HK: Reports FY11 Net $237M v $1.9Be; Rev $12.3B v $11.0B y/y
- DJS.AU: Trading halted pending vote by the board on new "strategic plan" to be unveiled on Wednesday
- CHU: Reports Feb subscribers 205.9M v 202.9M prior
- TEN.AU: Exec: Currently starting a strategic review of unit, Eye Corp
- AAPL: CEO Cook schedules conference call for Mar 19th to discuss company's cash balance at 09:00ET (06:00PT)
- FP.FR: CEO: Reached agreement with Sinopec for shale gas exploration rights; Sinopec and China's SAFE said to have taken 2% stake in Total (terms not disclosed) - US financial press
***FX/Fixed Income/Commodities***
- (IN) India Jewelers continue strike action over gold tax hike
- Tokyo Steel, 5423.JP: Raising April prices for h-beams from ¥71K/ton to ¥73K/ton; Hot rolled coil prices raised from ¥58K/ton to ¥60K/ton
- (AU) Newcastle Coal Exports in week ended Mar 19th w/w: -43 v -5.4% prior
- (CN) China fuel prices may be increased by CNY700/ton - Chinese press
- (IQ) Iraq has diversified its crude shipment options by moving some export capacity away from Strait of Hormuz