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Wakeup Call on Forex Markets

Renegade Strength in Japan

Fri, Mar 28 2008, 08:10 GMT
by David Karsbøl

Saxo Bank

Surprisingly high inflation, Retail Trade and Stocks Markets in Japan. Is Japan again doing the exact opposite of the Western economies?

Overnight News Bullets

• AU Job Vacancies (Feb) out at -2.5%. Prior 5.5%

• JN Small Business Confidence (Mar) out at 46.6. Prior 44.3

• GE Gfk Consumer Confidence Survey (Apr) out at 4.6 vs 4.4 expected. Prior 4.5

• SW Trade Balance (Feb) out at 17.1B vs 8.8B expected. Prior 11.0B

• NO Unemployment Rate (Mar) out at 1.7% vs 1.6% expected. Prior 1.7%

• UK Total Business Investment (4Q) QoQ/YoY out at 1.8%/5.3% vs -0.5%/1.7% expected. Prior -0.5%/1.7%

• US GDP Annualized (4Q) out at 0.6% as expected. Prior 0.6%

• US Personal Consumption (4Q) out at 2.3% vs 1.9% expected. Prior 1.9%

• US GDP Price Index (4Q) out at 2.4% vs 2.7% expected. Prior 2.7%

• US Core PCE QoQ (4Q) out at 2.5% vs 2.7% expected. Prior 2.7%

• US Initial Jobless Claims (Mar 22) out at 366K vs 370K expected. Prior 375K

• US Continuing Claims (Mar 15) out at 2845K vs 2885K expected. Prior 2850K

• NZ GDP QoQ/YoY (4Q) out at 1.0%/3.7% vs 0.8%/3.4% expected. Prior 0.5%/3.3%

• JN Jobless Rate (Feb) out at 3.9% vs 3.8% expected. Prior 3.8%

• JN Tokyo CPI YoY (Feb) out at 0.6% vs 0.5% expected. Prior 0.4%

• JN Natl CPI YoY (Feb) out at 1.0% vs 0.9% expected. Prior 0.7%

• JN Retail Trade YoY (Feb) out at 3.1% vs 2.0% expected. Prior 1.3%

Markets

• FX: EURUSD close the all-time high (1.5904). Overall consolidation mode in FX markets.

• Fixed Income: Consolidating or slightly lower. US Rate outlook deteriorating slightly. Now 42% chance of 50 bps. Rate cut by the 30th of April, according to STIR Futures.

• Equities: European session somewhat higher, but US again sliding and closing at day lows. Nikkei up 1.7%

• Commodities: Precious metals ranging, waiting for USD direction. Crude still higher ($107/bbl).

O/N Data Heat map:

Calendar

Today's Highlights:

This and Next Week’s Highlights:

What's going on?

• After having trailed below zero for the better part of early 2000’s, Japanese CPI has now hit a decade high at 1%. Rising unemployment and continuing credit cresis, however, make it unlikely for the BoJ to raise rates anytime this year. Rising oil and food costs account for main reasons behind the latest inflation figures.

• Despite 2-day consecutive losses in the American stocks, Asian stocks registered biggest weekly gain in 2008 on speculation the profit growth will weather the credit crisis and bad news will be confined to the financials. Some of this positive sentiment can be expected to carry over to the European session.

• Despite the larger-than-expected draw in inventories, the gasoline prices, much as the crude prices, seem over-strecthed, leaving ample room for downside moves. We look to sell the May contract between $272 and $277 a gallon with a target of $258.

FX

USDJPY

FX Trading Strategies

Published on  Fri, Mar 28 2008, 08:36 GMT

Archive

• Signs of Risk-Aversion Re-entering the Market
  Published On Fri, May 9 2008, 07:00 GMT
• Long-Term Turnaround in the USD
  Published On Thu, May 8 2008, 06:49 GMT
• Weekly US ABC Consumer Confidence hits 17-year low
  Published On Wed, May 7 2008, 06:57 GMT
• Crude Oil Making New, Fresh Highs
  Published On Tue, May 6 2008, 06:48 GMT
• Markets Set To Ease Into a New Week
  Published On Mon, May 5 2008, 07:18 GMT

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Saxo Bank  | Smakkedalen 2, DK-2820 Gentofte
http://www.saxobank.com/ | info@saxobank.com