They Want It To Go Down
The yen has been in rally mode as the Japanese come to terms with new
accounting rules that require firms to mark-to-market losing assets. Firms
with money overseas have been repatriating yen and driving the demand and
price higher. So finance officials came out today to talk down the yen. A
stronger yen makes exports more costly and with tight-fisted Japanese
consumers doing little to stimulate domestic demand, Tokyo hopes to export
its way out of the economic slump. And Japan needs a weak yen to do this.
Statements from two of Japan’s top financial officials demonstrate the
government’s weak yen policy preference. Zembei Mizoguchi, an official of
the Ministry of Finance’s international bureau, told the Dow Jones news service
that the yen’s rise against the dollar has been “excessive.” And
Japan’s Finance Minister, Masajuro Shiokawa, said he favors the Bank of
Japan pumping more money into the system to drive the yen lower.Â
This is Japan jawboning the yen lower, the cheapest alternative. It also
represents a clearer policy stance from Tokyo and increases the chance of
further downside in the currency. The September Japanese yen
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gapped lower overnight and just filled the gap left on August 15. Here,
the mid-August highs in the .8280 area are providing support (an area that
also corresponds with the 38.2% retracement of the summer run). Â
In a very constructive sign that could take the contract to new highs in
coming days,
British pounds
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poised to close near multi-month highs again. Pounds had been on the Momentum-5
List yesterday.Â
December cotton
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intraday double tops yesterday. This morning, cotton is descending out of
the pattern. Cotton is consolidating on its lows of the day and appears to
have more downside work to do out of both its double top and a Slim
Jim/bearish intraday flag formation. A move today below yesterday’s low also
triggers a Pullback
From Lows setup.Â
In the energies, October crude oil
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and
heating oil
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Pullback From Highs
setup, and
unleaded gasoline
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and is on its way to forming an outside day up, a constructive sign for its
bullish flag formation.Â
From the
Implosion-5 List,
December cocoa
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the July lows in the 885 area. This market made good on an Off The Blocks
short, a setup that has worked out in four of the past five
sessions.