Bobbys Corner-Open Market-March.17.2010

Good Morning:

The USD and JPY fell in overnight trading.  Both the BOJ and FED made comments to keep interest rates at near zero to keep their economies from falling back into recession.  Investors moved their money to the equity markets and higher-yielding currencies.
The GBP is recovering, as data released this morning shows that U.K. residents receiving unemployment benefits dropped.  The GBP has lost steam since 2010 started as concerns that the U.K. will not get a majority in parliamentary elections this spring.   This majority will be needed to address their budget deficit, and to propose additional measures to shore up their economy.

World equity markets are higher, and US Futures are pointing to a higher opening this morning.

Commodities are also higher this morning.

Oil:$80.79                                 Gold:$1129.40

HAVE A GREAT DAY &  GOOD LUCK

BOJ’s Shirakawa on the wires…

Speaking at a press conference, BOJ governor Shirakawa made the following comments:

• Steps not aimed at affecting forex.
• 3 month fund supply has had positive effect on stocks and forex.
• The latest steps may eventually have an influence on forex through economic improvement.
• BOJ aims to support demand by pushing down long term rates.
• Latest step is additional monetary easing.
• Wants broad understanding of BOJ’s easy stance to boost economy.
• Japanese economy is somewhat overshooting BOJ’s forecasts.
• BOJ’s steps aimed at ensuring economy, price recovery.
• Short term market moves should not guide central bank policy.
• It will take time for prices to return to desirable level.
• BOJ policy alone cannot help beat deflation.
• There is no miracle step that would lift prices.
• BOJ will examine effects and drawbacks of each step in guiding monetary policy.
• A split vote will not hurt BOJ credibility.

Jananese Household Confidence

The market was unaffected by a worse than expected household confidence number out of Japan coming in at 39.8 versus the forecast of 40.6, but was slightly better than it’s prior showing of 39.0

BOJ on the Wire Pushing Yen Lower

The following comments from the BOJ against the Yen have helped push the USD/JPY pair higher even as the USD remains under some pressure. In addition to comments from Morgan Stanley earlier that ‘Japan is increasingly likely to sell Yen and that Yen could weaken to 109 per dollar at year-end.’

• Hatoyama says markets should set exchange rates.
• Hayatoma says to take appropriate measures on the Yen if needed.
• Hayatoma says need to take proper action on stronger Yen.
• Shirakawa says BOJ’s accommodative policy is affecting the Yen.
• Shirakawa says liquidity injection has limited impact on prices.
• Shirakawa says shouldn’t be influenced by short-term prices.
• Kan says up to BOK to decide specific policy measures, expects BOJ to take appropriate policy measures.
• Kan says intervention always option if moves are abrupt.

Japan’s Final Q4 GDP

Japan’s 4th quarter GDP reading came in worse than expected, however the market had a limited reaction as risk pairs have traded slightly lower very early in the Asian session. The details of the release are as follows:

GDP (QoQ) - Survey:1.0%   Actual:0.9%   Prior:1.1%

GDP Annualized - Survey:4.0%   Actual:3.8%   Prior:4.6%

Nominal GDP (QoQ) - Survey:0.2%   Actual:0.1%  Prior:0.2%

GDP Deflator (YoY) - Survey:-3.0%   Actual:-2.8%   Prior:-3.0%

Bobbys Corner-Open Market-March.9.2010

Good Morning:

As world equity markets snap 2 days of gains-the JPY advanced as investors look for a “safer haven” for their funds.
The JPY also gained as speculation mounts that Japanese companies are repatriating profits before the end of the fiscal year.  New tax breaks initiated by the Japanese government may lead to “larger than normal” repatriations.
The GBP lost ground overnight as Moody’s Investor Services said that U.K. banks creditworthiness may be at risk.

World equity markets are lower as companies report earnings that missed estimates, along with concerns that the year long rally in stocks cannot be sustained . 
Commodities are lower, and government bonds rose.

Oil:$80.42                                        Gold:$1117.70

HAVE A GREAT DAY & GOOD LUCK

JPY Prelim Machine Tool Orders

After a delayed release the monthly reading of Japan’s preliminary machine tool orders came in at 2173.%; much better than the prior showing of 189.4%.

Hopes of USD Peg Removal Fade…

Zhou Xiaochuan, the governor of the People’s Bank of China, has made a clear indication that Beijing is preparing to abandon its peg to the USD. In his statements, it was said that the peg was a measure to help China make it through the financial crisis. However, as markets digest the comments, some continue to winder if Mr. Zhou was suggesting a shift in policy may still be some time off. Further more, Beijing may need to raise interest rates or appreciate the currency to meet its target of keeping inflation below 3% this year.

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