Lack of data and no important news kept the FX market rangebound. BoJ comments today made only little impact, but we expect more downside in the Yen. EUR- and USD-crosses more or less unchanged.
MAJOR HEADLINES – PREVIOUS SESSION
JPY
The BoJ minutes was not very interesting as we expected. According to the BoJ, the economy is "likely to expand moderately'' and rateswill be "gradually'' pushed higher, said the minutes, released today. The yen has fallen against 15 of the 16 most-active currencies tracked by Bloomberg since the central bank lifted borrowing costs for the first time in almost six years on July 14, as investors cut bets on a second increase this year. BoJ Deputy Governor Mutu said that the timing of the next rate hike is completely open, leaving room for a hike in December as well as next year. We're still expecting to see JPY weakness againt the other major currencies - EURJPY made new highs yesterday at 151.67 and we expect the new base will be at 150.75 as written in the orderbook below. Tonight the Japanese merchandise trade balance will be released as well as the activity index. The markets as well as our expectations point towards lower figures in both, which could add further pressure on the yen.
Later today we have the Canadian leading indicators for October as well as retail sales for September. Any surprise in the figures, especially the leading indicators, as the retail sales are a very volatile time series, will affect the Canadian dollar.
From yesterday:
EUR
The outcome of the G10 meeting in Sydney was comments from Trichet, that "Strong Vigilance" still is needed to keep the European inflation in check as global growth in 2007, while slowing from this year, will "remain very, very dynamic." As BoJ Governor Fukui of Japan signalled the opposite in Japan a rally was sparked in EURJPY touching 2006 highs at 151.66. Higher-than-expected German PPI supported the increase in the EUR, that rose against most of the majors.
