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The yen is trading above 132 vs. the dollar, after reaching a two week highs of 131.85 boosted by a 5.9% or 638 point surge in the Nikkei to a 6-month high of 11,450 due to yen repatriation ahead of the fiscal year end on March 31. If Nikkei continues to rise on Tuesday, which is likely, given the surge in US stocks today (The Dow skyrocketed 2.1% or 217 points to 10586 and NASDAQ rose 3.1% or 56 points to 1859) the yen could strengthen vs. the dollar to a year highs of 130.30. Investors were encouraged by signs that large Japanese banks, such as Mizuho that let construction company Sato Kogyo go bankrupt, were taking steps to address the issue of non-performing loans. Moreover, the Nikkei has been lifted by the government's announcement of more stringent requirements on short-selling stocks last week. Furthermore, investors welcomed news that the Bank of Japan had increased its monetary base by 27.5% in February, in its largest rise since the oil crisis in 1974, reflective of Japan's efforts to address its ailing economy. The Nihon Keizai Shimbun reported that according to 98 company presidents and chairpersons surveyed late last month 70.4% think that structural reforms promised by PM Koizumi are "slightly behind schedule . Some 61.4% cited "elimination of nonperforming loans" as the lagging area of structural reform, and over 90% are unsatisfied with progress made on bad loan disposals. Top officials from banking and life insurance industry groups said Monday that the government should stop the development of the state-run savings and life insurance systems, as they force private financial institutions' operations. A public postal corporation, to be set up in 2003, must watch its innovative plan of balancing the private sectors and bound the area of its operations. January workers' total cash earnings totaled Y302, 118 down 2.3% from a year earlier, according to preliminary data released Monday by the Ministry of Labor, due to the harshness in employment situation and signifying consumer spending could decline further in months ahead. Japanese Economic Minister Takenaka said that bank problems after special inspections would become main issue for Japan govt. Takenaka added that daily stock market price swings should not be yardstick for govt policy and FinMin Shiokawa said would make more effort for specific anti-deflation measures. Shiokawa also said Tokyo stocks won't rise decisively unless economy recovers. USD/JPY support is seen at 132.0, 131.75 and 131.50. Resistance is viewed at 134.0, 134.40 and 134.80.
EUR/USD is trading just below 87 cents after rising to a 1-week high of 87.13 after Eurozone business climate indicator climbed to its highest in 5 months to -0.86 in February suggesting an economic recovery is occurring. The EU's Rato noted the presence of signs of an economic pick up in the US and Europe, and thus he expects a recovery to consolidate over the next few months. In the meantime, the EU's Solbes also expressed his expectation for a gradual recovery in the first half of this year, since he believed the Eurozone economy bottomed last quarter. Solbes projected the European economies would post average growth rate of 1.5% in 2002. Upside capped at 87.20, 87.40 and 87.80. Support stands at 86.30, backed by the 86.0-cent figure, and 85.50.
Major data due from the US this week consist of factory orders, jobless claims, productivity, consumer credit, and the labor market report. Key Eurozone indicators include the Euroarea Services PMI, Euroarea unemployment, German Services PMI, French Services PMI, Italian Services PMI, Spanish industrial production, German manufacturing orders, German unemployment, ECB rate decision, Italian GDP and Dutch CPI. The main data releases from the UK are the purchasing managers survey for services, the CBI survey of distributive trades, the NTC/FRES report on jobs, housing starts and the Bank of England's rate decision. Highlights from Japan comprise the MoF corporate survey, trade balance, indices of business conditions, GDP, money supply and wholesale prices.