JPY

Good Morning:

As world equity markets snap 2 days of gains-the JPY advanced as investors look for a “safer haven” for their funds.
The JPY also gained as speculation mounts that Japanese companies are repatriating profits before the end of the fiscal year.  New tax breaks initiated by the Japanese government may lead to “larger than normal” repatriations.
The GBP lost ground overnight as Moody’s Investor Services said that U.K. banks creditworthiness may be at risk.

After a delayed release the monthly reading of Japan’s preliminary machine tool orders came in at 2173.%; much better than the prior showing of 189.4%.

Zhou Xiaochuan, the governor of the People’s Bank of China, has made a clear indication that Beijing is preparing to abandon its peg to the USD. In his statements, it was said that the peg was a measure to help China make it through the financial crisis. However, as markets digest the comments, some continue to winder if Mr. Zhou was suggesting a shift in policy may still be some time off. Further more, Beijing may need to raise interest rates or appreciate the currency to meet its target of keeping inflation below 3% this year.

The market was not phased by a slightly better than expected leading indicators number out of Japan, coming in at 97.1% with a forecast of 96.9% and a prior reading of 94.7%. Currently, the JPY is trading at the 90.00 handle against the USD. Japan also has prelim machine tool orders (y/y) due out a little less than one hour from now.

The market showed little movement to a better than expected Economy Watchers Sentiment out of Japan which came in at 42.1 versus it’s forecast of 40.2 and prior reading of 38.8.

Good Morning:

The GBP slid below $1.50 for the first time in 10 months, as polls show that the Tories have the smallest lead over the Labour Party in more than 2 years-thus any legislation to assist the economy may get stalled in Parliament.
On another note-the JPY fell as investors look for higher-yielding assets.
The Euro continues to be under pressusre as the debt issues that are hurting Greece may (are) spead to other Souhern European countries.

World equity markets rose-and US Futures are pointing to a higher oipening this morning.

Oil:$79.57 Gold:$1112.70

Good Morning:

The USD and JPY dropped overnight as signs that the global recovery is getting more and more traction, thus increasing demand for higher-yielding assets.
Greece’s debt problems will still put pressure on the Euro, and may dampen demand for EuroZone assets.

World equity markets are higher-and US Futures are lower at this time.

Oil:$78.40                            Gold:$1107.20 

The following economic releases consisting of higher than expected inflation data, better than expected Industrial Production and much better than expected retail sales has helped the risk pairs appreciate off session lows, in particular USD/JPY moving to the middle of the 89 handle. The details of the releases are as follows:

Tokyo CPI (YoY) - Survey:-2.0%    Actual:-1.8%   Prior:-2.1%

Tokyo CPI ex food/energy (YoY) - Survey:-1.5%   Actual:-1.3%   Prior:-1.4%

National CPI (YoY) - Survey:-1.4%   Actual:-1.3%   Prior:-1.7%

National CPI ex food/energy  (YoY) - Survey:-1.2%   Actual:-1.2%   Prior:-1.2%

Industrial Production (MoM) - Survey:1%   Actual:2.5%   Prior:1.9%

Industrial Production (YoY) - Survey:16.5%   Actual:18.2%   Prior:5.1%

BOJ’s Deputy Governor Yamaguchi made the following comments to reporters in Kagoshima:

• Japan’s fiscal situation is very severe.
• BOJ is always ready to take necessary action.
• Fiscal discipline and balance are key for stable yields.
• Investors are always watching gov’t fiscal stance.
• The markets view of Japan’s finances is that they are stable.
• The market has absorbed Japan’s bonds smoothly.
• JGB long-term rates have been stable, low levels.
• Pace of price decline easing has been a bit slow.
• Price movements are in line with BOJ forecasts.

Japan’s January Trade Balance was released better than expected giving a mild and short lived boost to the risk pairs, with USD/JPY remaining relatively unchanged. The details of the release are as follows:

Trade Balance - Survey:-136B   Actual:+85.2B   Prior:545B

Adjusted Trade Balance - Survey:544.5B   Actual:728.48B   Prior:522.8B

Trade Exports - Survey:39.5%   Actual:40.9%  Prior:12.1%

Trade Imports (YoY) - Survey:12.1%   Actual:8.6%   Prior:-5.5%

Corp Service Price (YoY) - Survey:-1.1%   Actual:-1%   Prior:-1.5%