[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]  Japanese Forex Trading Preview  January 23, 7:00 PM: EUR/$..0.8777 $/JPY..134.47 GBP/$..1.4245 $/CHF..1.6695  Japanese Forex Trading Preview  by Darko Pavlovic  At 6:50 PM Japan Dec customs cleared surplus (exp n/f, prev n/a)  USD/JPY is trading around 134.45 near its fresh three-year highs of 134.63 after Japanese and US officials did not strongly object to weak yen, prompting market expectations that Tokyo plans to use weak currency to boost exports and bring the economy out of current slump. Traders look to break important psychological resistance at 135 yen but wary of possible comments from Fed Chairman Greenspan tomorrow.US Treasury Secretary O'Neill's comments overnight that only structural reforms, and not currency depreciation, would solve the Japanese banking quandary and increase productivity send the yen to a three year lows. O'Neill added that he does not believe Japan was deliberately weakening the yen. Nonetheless, analysts interpreted his comments to mean that the US would be tolerant of a weaker yen. Despite MoF Mizoguchi's denials that neither O'Neill or Shiokawa approved of yen weakness in their meeting, investors sold the yen as Finance Minister Shiokawa, Economics Minister Takenaka and Prime Minister Koizumi all reiterated that FX rates should be determined by markets. In addition, the MoF's Kuroda stressed that Japan did not intend to drive the yen down, though he suggested that a weak yen, which is reflective of Japan's poor economy, could help the situation. Kuroda also brushed aside concerns from Japan's Asian neighbors that the yen's depreciation would negatively impact their economies because they have more flexible exchange rate policies and stronger foreign reserve positions following the 1997-1998 Asian financial crisis. Japan's customs cleared trade surplus fell 18.4% in December from a year earlier, to 667.2 bln yen. Japan's surplus with the US (its largest trading partner) was down 23.6% y/y to 526.9 bln yen. The trade surplus for the 2001 fell 38.3% from the previous year at 6.6115 trln yen, a third consecutive year of decline. Resistance is eyed at 134.63, 135.0 and 135.50. Support holds at 133.60, backed by 133.0 and 132.60.   EUR/USD is trading near its one month lows of 87.80 after European Central Bank president Duisenberg's testimony before the EU's Economic and Monetary Affairs Committee suggested that a rate cut in the foreseeable future is unlikely. He further noted that the recent decline in confidence may have bottomed out. Duisenberg also had the temerity to say that he was uncertain that a US recovery would be quicker than one in the Eurozone, because while the Federal Reserve cut interest rates faster than the ECB, the US rates were higher from the outset. He remarked that monetary policy could impact growth in the short-run but not in the long run, and thus reiterated that the current level of ECB rates is considered appropriate. Support seen at 87.70 and 87.50-- the 31.8% Fibonacci retracement of the move from 82.25 to 95.96. Resistance is viewed at 88.90, followed by 89.10-- the 50% Fibonacci retracement of the same move, and 89.55.  The pound slightly recovered at 1.4232 after falling  to a 1-1/2 month low of 1.4222 against the dollar and to a 2-week low of .6213 against the euro, weighed by weak data and comments from an official indicating her support for euro membership. The UK trade deficit widened to 2.84 bln pounds in November from the previous month's deficit of 2.39 bln. Furthermore, the Confederation of British Industry noted in a quarterly survey that manufacturing output was declining at its fastest pace in 2-1/2 years and thus called on the Bank of England to enact another rate cut. The pound was hurt after British Trade and Industry Secretary Patricia Hewitt commented on the benefits of joining the euro, including currency stability and cost transparency. Moreover, she expressed the opinion that there is something fundamentally wrong in the current euro/pound exchange rate when highly productive manufacturing plants were struggling to export profitably to the Eurozone. Support at 1.4221-- the 61.8% Fibonacci retracement of the move from the January 8, 2001 high of 1.5101 to the June 12, 2001 low of 1.3680. Next downward target is seen at 1.420 and 1.4160. Upside capped at 1.430, 1.4360 and 1.440.a small chance of a rate cut at the Jan 30 meeting, leaving the majority to believe rates will be held steady at a 40-year low of 1.75%.  The National Association of Manufacturers today praised US Treasury O'Neill in his remarks yesterday when he said that currency depreciation policies could not:"repair underlying  economic problems such as productivity or non-performing bank loans".  NAM described O'Neill's words as being "right on the money" which were deemed to shed light on the 10% fall in the yen of the past 4 weeks. The remarks follow a letter to the Treasury last week citing numerous negative effects of the strong dollar, including loss of business share in global markets, increased layoffs of employees, and relocation of plants overseas.  Having said that, Secretary O'Neill still reiterated the US strong dollar policy as a way to avoid any uncontrollable decline in the US currency should his words to Japan may be misunderstood to be intentionally weakening the dollar. Mr Kuroda of Japan's MoF wrote today in the FT that the declining yen reflected the nation's ailing economic situation and did not emanate from deliberate government policies.      	[IMAGE] Audio Mkt. Analysis Dollar Hammers All Major Currencies        Articles & Ideas  NAM & the Strong Dollar: Phase II   Philly Fed-Supported Optimism       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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