[IMAGE] Forums Discuss these points in the Forums:  Forexnews Forum       Technicals Live Charts Analysis available from: Cornelius Luca   J.P. Chorek   Technical Research Ltd.   Charts & News featuring Standard & Poor's        Interest Rates  US: Japan: Eurozone: UK: Switzerland:   1.75%  0.15%  3.25%  4.0%  1.25-2.25%        [IMAGE]   	 [IMAGE]  GBP Steady After BoE Keeps Rates at 4.0% January 10, 7:00 AM: EUR/$..0.8901 $/JPY..132.31 GBP/$..1.4425 $/CHF..1.6644  GBP Steady After BoE Keeps Rates at 4.0% by Jes Black  At 8:30:00 AM US Dec Export Prices (exp -0.2%, prev -0.4%) US Jobless Claims (exp 410k, prev 447k) US Dec Import Prices (exp -0.8%, prev -1.6%) At 10:00:00 AM US Nov Wholesale Inv. (exp n/a, prev -1%)  Sterling rose to day highs across the board ahead of the Bank of England's rate decision at 7:00 AM, which left rates unchanged at 4.0% as expected. Investors considered the BoE's decision evidence that strong consumer spending was driving growth in the UK. GBP/USD rose more than one cent to a high of 1.4462 from an overnight low of 1.4340, but remained within a channel from 1.4340 to 1.4480. Against the euro, sterling rose to a high of 61.73 pence, but resistance at 61.70 held, which should keep sterling's gains in check. However, follow-up buying in GBP was subdued as markets generally expected no rate cut from the BoE.  The euro also rose to a day's high around 89.35 cents ahead of key Eurozone data today, but fell following a surprise drop in German data. November industrial output fell 1.8% m/m after strong declines in the previous months to bring the y/y down 4.8%. The decline beat the consensus forecast for a fall of 0.2% and was very negative, but possibly not surprising given the amount of attention paid to Germany's manufacturing woes. Nevertheless, the fall is likely to put Q4 GDP at or near 0% and will put the ECB in a bind to cut interest rates in February.   EUR/USD price action continued to move within a channel from 88.70 to 89.50 as it hovers around the key 89.10 level, which marks the 50% Fibonacci retracement of the move from 82.25 to 95.96. Overnight, the pair briefly tested resistance at 89.50, but was rejected. Now, failure to maintain above 89.10/20 would probably call for a test lower to 88.70 followed by 87.60, which marks the 61.8% Fibonacci retracement level of the same move. Moves higher are not seen by the market as indicating strength given the euro's difficulty to remain above 90-cents.  Meanwhile, the yen pared earlier gains despite concerns voiced by Japanese officials today that the yen's slide was too fast. Dealers were quick to buy USD/JPY near the 132.00 level after its recent fall from a new 3-year high of 133.37. PM Koizumi said at visit to Malaysia that Japan was not lowering the yen intentionally and that FX rates should be decided by markets.  However, Malaysian PM Mahathir said he was watching with interest the impact of a yen fall on the Chinese yuan and ASEAN currencies.   Concern over the yen's 10% decline over the past 2 months corresponds with PM Koizumi's 7-day tour around Southeast Asia, which began on Wednesday. Although US monetary officials have expressed a desire to let markets determine FX rates, countries such as China and Korea have voiced concern about Japan exporting their deflation to the rest of the area. Overnight remarks by an official from South Korea's Finance and Economic Ministry that the weakening in the yen could create malaise in other Asian markets, hints that for political reasons Japanese officials are now likely to remain quiet until the PM returns.  Therefore, in the absence of further encouragement by Japanese monetary officials for a weaker yen, a period of consolidation would not be unusual. But any correction in USD/JPY would likely hold around 130-132 dealers say. EUR/JPY rose to a day's high of 118.76 but needs to hold above yesterday's low of 117.50 or it may target last week's lows around 116.90 and the 2-week low of 116.50. Upside is seen capped at 118.75 and last week's 2-year high of 119.71.  Despite the yen's reprieve from further losses, market sentiment remains very bearish. A recent report from the American Enterprise Institute for Public Policy Research says that JPY will come under further pressure in March once the market realizes that Japan is on the road to default if it does not reflate the economy. The Economic Outlook report contends that the government is expected to incur an unsustainable debt burden of $1 trillion in protecting depositors from the collapsing banking system in March when deposit insurance is revoked and Japanese investors likely make a run on the bank, thereby bringing collapse.  Ex-Japanese Minister of Finance Sakakibara, aka Mr. Yen, also said he sees the yen possibly falling to 150-160 per dollar towards year end. However, Sakakibara warned of possible intervention if the dollar rises above the psychological level of 140 yen. Mr. Yen said that yen weakness would permeate through to other Asian currencies which should gradually weaken vs dollar along with yen. In reference to Bank of Japan policy, he said the bank should keep easy monetary policy including more JGB purchases, but warned that excessive government spending would be ineffective and could lead to a collapse in the JGB market.  USD/CHF surged to 1.6619 after testing a session low of 1.6527 in early European trade. Trendline support at 1.6500 followed by 1.6410 should hold for further test higher, as rumors that the SNB may have been intervening to weaken the franc helped the currency slide to a low of 1.4833 vs the euro as well. The SNB is trying to talk the franc lower as a cheaper franc would boost export prospects and ease the economic pains facing the country. However, the SNB is unlikely to dramatically lower interest rates to do so. Swiss National Bank Vice-Chairman Gehrig reportedly said in an interview on Wednesday that the SNB's next move could be either up or down. This surprise comment caught markets off guard and given that the economy should show flat growth in H2 2002, as well as the central bank's dissatisfaction with the current strong CHF exchange rate.  Meanwhile, markets will be looking for signs of economic recovery in the US and more gains on Wall Street after yesterday's sour finish. The dollar strengthened across-the-board yesterday, encouraged by the rally in the US stock market for most of the day stemming from positive comments from technology bellwethers Cisco and Oracle. Even though the gains in equities dissipated by the close of trading, the greenback managed to hold onto its gains against the majors. But, dealers will watch to see if U.S. markets are getting ahead of themselves in anticipating a U.S. recovery.     	[IMAGE] Audio Mkt. Analysis Takenaka Leaves Little Doubt on Japan's FX Stance        Articles & Ideas  What's Next For the Euro?   A Look Back at 2001, Forex Themes for 2002       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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