[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 31, 7:00 PM: EUR/$..0.8578 $/JPY..134.90 GBP/$..1.4093 $/CHF..1.7207  Japanese Forex Trading Preview by Darko Pavlovic  No key data.   The dollar is trading off its fresh 3-years high of 135.14  yen on combination of possibility of S?downgrade; fall in PM Koizumi's popularity and markets optimism about the US recovery. Standard & Poor's rating agency said Japan faces the risk of a third rating downgrade in a year because its economy has fallen into a   worrisome'' deflationary recession. " Furthermore, overnight comments by MoF Mizoguchi did little to stem the bearish sentiment towards the yen, since he said that while Japan was not driving the yen down, it was still correcting from excessive strength. Japanese network Tokyo Channel 12 showed Prime Minister Koizumi's popularity fell to 34.7% after he fired Foreign Minister Tanaka compared with a 64.4% rating two weeks earlier. Markets were uneasy about Koizumi's political decision, since it could impede the implementation of structural reforms. US Secretary of Treasury O'Neill said that he had no sympathy for US manufacturers who are complaining about the strong dollar and expressed his hope about the economic recovery. At the current World Economic Forum in New York, Fuji Xerox's Chairman and CEO Yotaro Kobayashi said today that it would be acceptable for the yen to weaken to 140 per dollar, but a fall below that to 150-160 per dollar would create trouble since "it may have a major negative impact on interest rates and on our trade relationship with the United State or other countries" Kobayashi also pointed out that the falling yen would ameliorate Japan's deflationary spiral, but warned that too steep a plunge would push up real interest rates that would hinder Japan from clawing back out of its fourth recession in the past ten years. Foreign investors were net sellers of Japanese equities for a second week in the five days ended Jan. 25. Nikkei fell below 10,000 yesterday for the first time since Oct. 10 as Japanese stocks remain lethargic, reflecting the poor outlook of Japanese economy.  Japan has been pressured by other Asian nations, such as China and South Korea, to stem the yen's decline as it makes their exports less competitive. Japan December housing starts fell 12.9% from a year-earlier to 95,431 units, due to weakening consumer desire for mortgages as unemployment continues to rise. Resistance is seen at 135.25, 135.80 and 136. Support holds at 134.50, 134, and 133.70.   The euro fell two-third cents to a 3-session low of 85.79 against the triumphant dollar, dragged by the rise in German CPI to 0.9% m/m in January from the previous 0.1% and upbeat market sentiment about the US recovery. Preliminary data from several German states indicated that the upswing in prices resulted primarily from rising food prices and increases in taxes rather than euro cash related markups. Since German prices exceeded forecasts and because they tend to be be indicative of an overall rise in Eurozone inflation in January, analysts believe the European Central Bank is unlikely to lower interest rates when it next meets to determine monetary policy on February 7. This was evident in ECB Wellink's statement that there is no need for monetary policy action to counter the effect of the euro on prices. Support is seen at 85.55-- the 71.8% Fibonacci retracement of the move from 82.25 to 95.95, backed by 85.0. Upside capped at 86.60, 87.0 and 87.50.  The first piece of data markets will look at Friday is the January US labor market report. Although the unemployment rate is forecasted to creep higher to 5.9% in January from the previous 5.8%, non-farm payrolls are seen to improve to between  27k and  50k from  124k in December. The apparent contradiction between the aforementioned variables is explained by the unrelenting climb in continued claims to 3,382,000 in the week of January 19 from the previous revised 3,361,000, whereas the US 4-week average fell to its lowest level since August 2001 to 386k in the week of January 26 from the previous revised 401,250. The greenback overlooked this week's rise in US jobless claims to 390k from the previous revised 360k, since it came in below the 400k-level. Following tomorrow morning's labor report, the dollar is likely to find support from the release of the ISM (formerly NAPM) Purchasing Managers Index as it looks poised to jump to 49.4 in January from the previous 48.2, possibly even breaching the key 50-level. Various components of the index, including production, new orders and employment, are forecasted to exhibit a similar expansion. The University of Michigan confidence survey is not anticipated to generate waves in FX markets, as forecasts call for the final January reading to remain virtually unchanged at 94.3. Meanwhile, traders will also be monitoring this week's World Economic Forum in New York and next week's G7 meeting in Toronto for any dollar policy rhetoric in light of the recent complaints about the strong dollar by manufacturers.    	[IMAGE] Audio Mkt. Analysis Yen Battered Across the Board       Articles & Ideas  USD/JPY: ONeill, Koizumi and January Effect    Fed Moves On, Dollar Moves Up       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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