http://www.ananova.com/
The yen remained under pressure in midday trade following a disappointing overnight Japanese stock market performance and a warning by credit ratings agency Standard & Poors that Japan's debt ratings may have to be cut if reforms are delayed, dealers said.
"Further delays in implementing structural reforms could adversely affect the ratings," S&P said.
In addition, BNP Paribas' global head of FX strategy noted that the latest Japanese portfolio flow data shows that the net outflow from Japan has continued.
"Furthermore, with the S&P rating agency warning..., we would expect the portfolio outflow to continue, providing a negative back drop for the yen," he said.
Despite the pressures on the yen, ABN Amro currency strategist Rob Hayward thinks dollar/yen won't drift too much above the 119.50 level, because repatriation flows will pick up ahead of the fiscal half-year end in September. In addition, he thinks optimism about reform will resume ahead of elections.
Meanwhile, the euro remains uninspired against the dollar, as speculative traders trim net long positions and the futures markets points to a firm opening on Wall Street.
"We do not think that speculative traders will want to move to a near-term short position in euros and this should be consistent with the euro forming a base consistent with the low of $0.9625 on August 6," said Neil Mackinnon, chief economist at ECU Group.
The key focus on the economic front in the euro zone will be German second quarter GDP on Thursday. Ahead of that, all eyes will be on tomorrow's US trade and public finance data.
"These will highlight the twin deficits in the US with the trade numbers expected to register another record deficit and the Treasury likely to increase its budget deficit forecast this year," said BNP Paribas' Redeker.
Sterling remains rangebound with very little important UK data out until Thursday's retail sales figures.