More dour data out of Japan tonight, as Unemployment, Household Spending and Retail Sales all reported below expectation pushing the yen to a 5 month low of 107.38 during the Asian trade. Coming after the markedly improved numbers of January, the February reports are doubly depressing to yen longs as they unequivocally confirm that Japan is yet again mired in another recession - it's fourth over the past twelve years.
Although, the climb in the unemployment rate was pushed up to some extent by discouraged workers return to the market- which is actually a positive development - all of the other data tonight clearly shows a decline in economic activity. With oil still hovering above $50/bbl there is little Japanese can do to improve performance. However, should crude decline into the summer months, the yen may enjoy a reprieve as Japan remains the most leveraged G-3 economy to a drop in energy costs.
Meanwhile, the euro is enjoying a long delayed bounce as European dealers are back in force after the long Easter holiday. The pair has gained almost 100 points since yesterday's lows despite French Business Confidence hitting a 15 month low. One possible reason, besides the usual short covering, is market's fear that US Consumer Confidence due 15:00 GMT today may print below expectations as the impact of high oil prices hits US consumers as well. With gasoline now approaching $2.50/ gallon latest polls indicate that the price of fuel has become the number one concern of Americans, even outweighing fears of terrorism. Given that background today's Consumer Confidence report may have a strong impact on the pair if it reports materially worse than expected.