Yen Commentary for 18-Jul-08

Japanese Yen Commentary
Tables & Charts

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥105.90 level and was supported around the ¥104.75 level. Stops were reached above the ¥105.75 level, representing the 50% retracement of the move from ¥107.75 to ¥103.75. Traders continue to speculate that Bank of Japan will keep its overnight call rate unchanged at 0.50% for at least several months. The government reported slowing economic growth will render it difficult for Japan to balance its public finances by the 2011-2012 fiscal year. Capital flows data revealed that foreigners purchased a net ¥528.2 billion of Japanese bonds last week. The Nikkei 225 stock index gained 1.00% to close at ¥12,887.95. Dollar bids are cited around the ¥103.65 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥167.55 level and was supported around the ¥166.00 figure. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥211.75 and ¥103.80 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8213 in the over-the-counter market, up from CNY 6.8113. Many economic data were released in China overnight. First, Q2 GDP was 10.1% y/y and H1 GDP was up 10.4% y/y. Second, June PPI was up 8.8% y/y and H1 PPI was up 7.6%. Third, June CPI was up 7.1% y/y and H1 PPI was up 7.9% y/y. The government reported Chinese economic growth will decelerate further in H2. Fourth, H1 industrial output was up 16.3% y/y. Fifth, H1 retail sales were up 21.4% y/y. Sixth, fixed-asset investment was up 26.3% y/y.

SUPPORT   RESISTANCE

 
L1.       101.95 106.60 
L2.       100.60 109.95
L3.       98.75   113.30