[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:   2.5%  0.15%  3.75%  4.5%  1.75-2.75%       [IMAGE] 	 [IMAGE]  USD Slips On Sagging Confidence Ahead Of This Week's Data  October 29, 7:00 AM: EUR/$..0.89811 $/JPY..122.27 GBP/$..1.4457 $/CHF..1.6385  USD Slips On Sagging Confidence Ahead Of This Week's Data by Jes Black  At 2:00 PM US Sept Fed Budget (exp 27.1 bln, prev  79.9)  Confidence in the dollar started to slip away last Thursday as investors braced for a potentially poor round of economic data this week. It all starts with consumer confidence on Tuesday and ends with the October jobs report on Friday. But USD saw more than a little profit taking in the European session on Monday as traders squared positions ahead of the storm.  EUR/USD rose to a one-week high of 89.92, just lacking the momentum to get it over the 92-cent mark. The other European majors rose in tandem, climbing to respective one-week highs of $1.4479 against the pound and 1.6411 Swiss francs to the dollar. Sterling also benefited from speculation of M&A-related inflows. News that U.S. finance house Babcock & Brown may bid for British rail network operator Railtrack and a weekend newspaper report that German media giant Bertelsmann was eyeing Britain's Carlton Communications added to sterling's appeal, after better than expected GDP data last week. But more surprisingly was the yen's resilience in the face of a further downgrade by the Bank of Japan and their decision to not try and help the economy with more easy monetary policy. USD/JPY fell to a session low of 122.13, but regained key support around 122.25 later in the European session.  Given the past two week's of optimism in the face of weak earnings reports, US economic data this week will give a better clue as to how severe the downturn will be. Most forecasts are expected to show sharp declines and confirm the US edged closer to recession after the September 11 attacks on the United States. Final October releases include the Conference Board's confidence survey, Chicago PMI, NAPM, the Labor report, this week's jobless claims and the key Q3 GDP preliminary report. This will be the most widely watched release because if the Q3 GDP figure proves to be worse than the negative 0.9% expected, it will have a doubly harsh effect on USD as traders also anticipate a larger decline in the October Labor report.   In contrast, half the Eurozone nations will be on holiday this Thursday, which will lead to thin markets and high volatility with the bulk of US data due on Wednesday and Thursday. Therefore, downside risks to USD are enhanced, with only UK and Eurozone PMI data to weigh on the euro and pound this week. Comments from ECB member and Bundesbank president Welteke echoed the ECB's recent assessment by saying the central bank would  cut rates if it could do so without hurting price stability. Welteke also saw Eurozone economic growth significantly below potential at the present and that a return to long term growth of 2.5% will be delayed. But, expansionary effects of this years interest rate cuts are still in pipeline, he said.  Meanwhile, Q3 company earnings reports will continue to play an important role in this week's US stock market and therefore the dollar. So far, over 3/4 of the companies reporting matched or exceeded projected earnings targets, albeit for drastically lower forecasts. A majority of companies are reporting after the bell and given this week's upcoming data, trade is likely to be thin ahead going into Wednesday. Both Dow and Nasdaq futures are in negative territory.  Today's bleak economic and inflation outlook in Japan also failed to spur investors to go long the dollar against the yen. USD  was unable to benefit from the Bank of Japan's decision to keep monetary policy unchanged despite their forecast of a deteriorating economy and rising deflationary concerns. The BoJ's decision to hold interest rates near zero (ZIRP) and maintain a floor of 6 trillion yen in reserves did not impress FX markets.   But inaction was expected and offers to sell USD above 122.50 capped any dollar gains. Dealers say failure to extend gains beyond 123 level indicates that a minor top has been formed around last week's two-month high of 123.35. USD/JPY support seen at 122.30/40, and a break of 122.25/30 opens the way for a breach of the key 122.00 level, from which point most traders based their new long positions and where stop loss orders are likely to be placed. USD/JPY now hovering around 122.30.  The BoJ also offered a sharp downward revision in its own economic growth and price outlooks for fiscal 2001 and 2002, saying the economy was in a "severe" adjustment phase. The Bank expects a further fall in exports and output to affect domestic demand in the second half of this fiscal year and not reach a bottom until the second half of FY02/03. After that, the bank expects exports to recover, but sees prices on continued, gradual declining trend in FY01/02, and FY02/03. The BoJ board's full outlook for FY01/02 GDP ranged from -1.6% to -0.6%. FY01/02 CPI ranged from -1.3% to -0.9%. However, the bank's own figures are not seen as making any difference in monetary policy because BoJ Governor Hayami sees structural reform as the key to growth, not more money.  In other news, Finance Minister Shiokawa said the government will still aim for the 30 trillion JGB cap, but should remain flexible to unforeseen changes in economic environment. But worrying markets is what those "unforeseen changes" might be. If that includes today's downward revision to growth and inflation, then markets will be very disappointed with the new Koizumi government's promise of reform. Any violation of this key reform is likely to push the yen lower.  Shiokawa also said standards should be set for banks to foreclose on borrowers with excessive debts. "There are companies that are borrowing from banks that haven't paid any dividends to shareholders for some years, whose debts have been forgiven, but are still unable to recover. Banks should be able to foreclose on such firms," he said. "There should be a set of standards that makes it easier for banks to do so. That would be one way of resolving bad loans." The Financial Services Agency has been leading efforts to resolve the massive bad loans at banks as part of the government's plans to restructure the country's financial system but so far has made little headway.  	[IMAGE] Audio Mkt. 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