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At 7:50:00 PM Japan 01Q4 GDP (exp -4.5%, prev -2.1%) Japan 01Q4 Private Consumption (exp 8%, prev -6,7%)
The dollar fell to a one month low vs. the yen around 129.47 after the overnight release of the ESRI corporate survey showing that business sentiment improved in the Jan-March quarter to -37 from the previous 59. Furthermore, the business sentiment is anticipated to improve in April-June to -24, then -2 in July-September. The Fed's Broaddus said there was some evidence the Japanese economy is picking up a little bit. Meanwhile, the MoF's Mizoguchi reiterated there was little cause for the yen to appreciate due to its weak fundamentals, but this did not sway traders from pushing the yen higher. Fin.Min Shiokawa expressed his frustration to PM Koizumi about the pace of economic recovery and said to Koizumi: "You'll have a tough time selling guidelines without any details." Shiokawa just returned from G-7 summit of finance ministers and central bankers held in Washington last weekend, and had a hard time explaining to other leaders why Japan is not acting quickly enough in tackling its economic problems. The govt. may permit the BoJ to audit public postal corp. The public firm would open an account at the BOJ to be used to make cash settlements with private-sector financial institutions and in emergencies would be given some liquidity from the central bank. Support is viewed at 129.05/10- the 61.8% Fibonacci retracement of the rise from the 133.43 high thru the 126.35 low. Upside capped at 130.15, 130.45 and 130.80.
EUR/USD rose to a 3-month high of 89.31 against the dollar, shrugging off pessimism from the looming German union strike and this week's unexpected win for the controversial right candidate Le Pen in the first round of the presidential election. In other news, European Central Bank President Duisenberg assured there is no impact from German April CPI on the ECB's expectations for future Eurozone inflation, a viewpoint endorsed by Austrian Finance Minister Grasser who said the central bank's rate policy is in line with economic developments. Resistance is eyed at 89.25, 89.50 and 89.80. Support is seen at 88.60, 88.15 and 87.85.
USD/CHF plunged more than three-fourth centimes to hit a 3-month low of 1.6409 as the Swiss franc received a boost from comments by the Swiss National Bank's Gehrig that the central bank had no target exchange rate, thus easing fears swirling through markets that the SNB would attempt to intervene once again. Gehrig also said the SNB sees no need for major rate band moves for the time being and declared that the chances for a rate hike or cut are evenly split. Swissy also found reason to cheer in Gehrig's remark that the Bank expects a gradual acceleration of Swiss GDP in the next 2 quarters. Support holds at the 1.640-franc figure, backed by 1.6350 and 1.630. Upside capped at 1.6525, 1.6570 and 1.660.
Tomorrow's release of the US employment cost index is forecasted to remain flat at 0.9% or possibly edge up to 1.1% in Q1 due to a small increase in wages and benefits. The remaining US indicators for this week consist of jobless claims, existing home sales, real GDP and the University of Michigan confidence survey. Minneapolis Fed President Stern and Philadelphia Fed head Santomero are slated to speak on Thursday.Eurozone economic highlights include the German Ifo business climate indicator, Spanish PPI, Euroarea M3, France's INSEE industry survey and French GDP. From the UK, major economic releases comprise retail sales and GDP data. Noteworthy Japanese data are GDP, consumer prices, household survey of expenditures, labor force survey and commercial sales.