Yen Falls On Profit Taking
The yen gave up some of its gains
from yesterday against the dollar as traders looked to book profits
despite the fact that Japanese economic data continued to post impressive
results. Overnight the Tertiary Index registered a gain of 1.0% against
expectations of 0.9% rise while the All Industry Activity Index reported an
increase of 1.3% on a month over month basis versus consensus of 1.0%. Both data
points were driven by higher Japanese consumer spending which indicates that
Japanese economy continues to regain strength. On the calendar for tomorrow will
be the final figures for Machine Tools sales as well as the monthly Merchandise
Trade Balance figures expected to be slightly lower than the prior period most
likely due to higher import costs of oil.
At 11:00 GMT USD/JPY was trading at 110.10 while EUR/JPY was
at 134.70. The yen was weaker against both the dollar and the euro than this
time yesterday.
Meanwhile Tokyo’s Nikkei 225 again hit a new high on Tuesday,
but couldn’t hold the 12,500 level it broke in the morning. In Tokyo, the Nikkei
225 added 20.42 points, 0.16%, at 12,472.93. The Topix index of all
first-section issues rose 2.18 points, or 0.17%, at 1,272. This was the first
time since July 5, 2001 that the Nikkei topped the 12,500 mark on an intraday
basis.
The Nihon Keizai Shimbun reported Tuesday that results of a
poll show public support for Japan’s Koizumi Cabinet climbed to 49%, a 2-point
improvement from the previous survey t earlier this month and the highest level
since May 2004. Toyota Motor Corp. rose 0.7%. The Nikkei reported that Toyota
had the highest market capitalization among companies listed on the first
section of the Tokyo Stock Exchange as of Monday, knocking cellular phone
service giant NTT DoCoMo Incfrom the No. 1 spot. NTT DoCoMo shares ended the
session 1.1% higher.
Japanese 20 year government bonds had their largest gain in a
week as government auction demand increased materially. The bid to cover ratio
increased to 3.27 form 2.78 a month ago.
Boris Schlossberg serves as Senior Currency Strategist with
Forex Capital Markets in New York, the largest retail forex market maker in the
world. He is a monthly contributor to SFO Magazine with articles focused on
understanding proper risk management, trader psychology and true market
structure. He is also a featured expert at www.fxstreet.com and a frequent
commentator for the Marketwatch From Dow Jones Currency and Bond Report
sections.
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