[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]  BoJ Gives Into Government Pressure, JPY Falls In Dismay  February 28, 7:00 AM: EUR/$..0.8645 $/JPY..134.15 GBP/$..1.4153 $/CHF..1.7059  BoJ Gives Into Government Pressure, JPY Falls In Dismay by Jes Black  At 8:30:00 AM US Jobless Claims (exp 370k, prev 383k) US Q4 Final Sales (exp 1.8%, prev 1.7%) US Q4 GDP q/q prel (exp 0.8%, prev 0.2%) At 9:00:00 AM US Feb New York NAPM (exp n/f, prev 243.6) At 10:00:00 AM US Feb Chicago PMI (exp 47.2, prev  45.1)  The dollar traded in a tight range against the European majors on Thursday as markets digested Fed Chairman Greenspan's guarded optimism and awaited key economic data from the US. Meanwhile, the yen was little changed from the Bank of Japan's decision to increase its outright JGB purchases to one trillion yen a month from 800 billion, but it did fall in afternoon London trade as dealers saw little hope in the anti-reform package presented overnight.   Today's economic data is expected to underpin Greenspan's outlook. Markets expect a healthy revision to Q4 '01 GDP to 0.8%-1.0% from the advanced reading of 0.2%. Stronger spending and a fall in the trade deficit are credited for the increased optimism. Later in the morning, traders will assess the Chicago PMI for insight to the ISM's PMI on Friday. Chicago PMI is forecasted to rise to 47.7 in February compared with the previous month's 45.1 as conditions in the Midwest manufacturing region continue to improve. Weekly jobless claims are expected to decline to 370k from 383k.  Despite the upbeat forecasts, today's Enron hearings could keep the dollar under wraps as investors continue to look at stock market valuations with skepticism.    Data from the Eurozone showed a jump in CPI to 2.7% in January from 2.7%. This was slightly higher than the 2.6% forecasted. Economists expect the figures to keep interest rate policy steady at the European Central Bank, which holds its next rate review meeting next week. Supporting this view was evidence that Eurozone M3 rose on a 3-month basis to a high of 8% from 7.8%. The ECB also watches M3 as part of their inflation outlook, but has long said M3 poses no real price risks.   Recent comments suggest we are likely to see steady monetary policy from the Fed, ECB and BoE for some time to come. At next week's Fed meeting, Greenspan is likely to keep the easing bias to avoid the problem BoE Governor George ran into with markets driving yields higher on overzealous expectations of rate hikes.  EUR/USD maintained in a tight range around 86.40 after dropping overnight to a 3-week low of 86.27 before again testing resistance around 86.60 in today's session. Sentiment is again turning bearish, but only a move through 86.30/15 on its way to 85.63 low would put the euro back in full bear mode. Support is seen at 86.30, 86.15, and 85.60. Resistance is viewed at 86.60, 87.10, and 87.85.  GBP/USD broke below support at 1.4180 after and revisted an overnight 2-week low around 1.4150 after BoE Governor George today tried again to talk down the currency. George said sterling strength exacerbates the imbalances the central bank would like to correct. Therefore, a fall would help the BoE do its job to get the economy on one track again.  Usually central bankers like a strong currency because it allows for lower interest rates and flexibility on monetary policy. But with RPIX running near their target of 2.5%, George appears more concerned with the UK's two-speed economy. He repeated that "unbalanced growth better than no growth" for the UK, but warned that there is a risk that consumer spending could moderate sharply. Therefore, sterling remains weak after back-to-back surprise declines in UK retail sales were seen as a sign that consumer spending could have peaked last year, which stands in sharp contrast with the upbeat outlook for the US. Although risks to a sharp falloff in consumer spending worry the BoE and markets, the proactive stance of the MPC pleases the market more than the conservative approach of the ECB. EUR/GBP was little changed around 61 pence.  Yesterday's downward revision to UK GDP showed the economy was flat in Q4, down from a preliminary estimate of 0.2% growth. The revision caught traders off guard, but did not provoke a break of key support at 1.4140. Follow up support is viewed at 1.410 and 1.4075. Upside capped at 1.4260, 1.430 and 1.4345.  Meanwhile, USD/JPY fell to a day's low of 133.57 in early London trade amid profit taking after encountering strong resistance around the 135 area overnight and a remark from Japan's top financial diplomat that the dollar was unlikely to drop sharply. Repatriation concerns also limiting dollar gains, but with repatriation poised to slow near the end of March and net outward investment to resume thereafter dealers expect to see further yen weakness in the weeks to come allowing USD/JPY to target 140 once the 135.00/20 major resistance band is broken. Upside capped at 134.70/85 and strong resistance at 135.15. Support holds at 133.50, 133.20, 133.0 and 132.50.  The Bank of Japan's decision to increase its outright JGB purchases to one trillion yen a month from 800 billion also had an initial supportive effect as it was seen easing funding pressures next month. But the yen's gains evaporated as markets saw little hope in the Japanese government's anti-deflation package.  The yen should not fall too much from the increase in liquidity even though it is supposed to mean a weaker yen because there is more of the currency circulating. Instead, since increasing liquidity in Japan is ineffectual amid structural barriers causing rampant deflation and lack of demand the yen has responded less and less to recent increases in liquidity, because it is not leading to inflation and therefore not diminishing the value of the yen.  Despite BoJ Governor Hayami's remark that today's easing was not politically motivated, Hayami has made public his desire now for the government to inject public funds into the troubled banking sector. Whether there was a quid pro quo agreement remains to be seen. PM Koizumi's anti-deflation package avoided any concrete plan to rescue banks but Hayami worries that without a recapitalization Japanese banks will be threatened with losing international banking licenses because their capital ratios have fallen to below international standards.  Government has tried to avoid a publicly unappealing tax payer fund injection, instead opting for creating a floor under asset prices which will keep banks capital adequacy ratios above the 8% limit set by the BIS. But an injection of funds would allow banks to write off non-performing loans and improve their balance sheets. Therefore, the government's plan is seen as a  muddle through  and more risky for the markets.   	[IMAGE] Audio Mkt. Analysis USD Tempered by Greenspan's Cautiousness       Articles & Ideas  Goodbye Hope, Sayonara Yen   Will Greenspan & Data Overcome Enronitis?       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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