Reply #6: daily dollar watch [View All]

[UpInArms]

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Dollar jumps on rate expectations, tankan hits yen

http://today.reuters.com/investing/FinanceArticle.aspx?type=economicNews&storyID=URI:urn:newsml:reuters.com:20051003:MTFH89275_2005-10-03_10-24-46_L03489351:1

LONDON, Oct 3 (Reuters) - The dollar ran to a 16-month high against the yen and a three-month peak versus the euro on Monday, boosted by anticipation of more U.S. interest rate rises and a disappointing survey of corporate sentiment in Japan.

With investors focused more on inflation than growth, the dollar also surged to a two-month high against the Swiss franc and sterling.

By 0952 GMT, it was up 0.8 percent at $1.1933, after hitting a three-month high at $1.1919 earlier in the session.

It was up nearly half a percent near a 16-month high versus the yen at 114.02.

"I think this dollar momentum should stay in place for a little while, if we get a strong close...it looks like we could challenge the year's high ($1.1866) ," HBOS currency strategist Naeem Wahid said.

The headline diffusion index for big manufacturers in the Bank of Japan's quarterly tankan survey of business confidence was plus 19 for September, up a tad from the June survey but slightly below financial markets' expectations for a reading of plus 20.

"Markets are now shifting their attention to inflation and that's providing support to the dollar. I think Tankan was a bit disappointing, but not significant (enough) to cause a rapid dip in the yen," Mitual Kotecha, head of currency research at Calyon in London said.

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Dollar Remains On Warpath

http://www.dailyfx.com/index.php?option=com_content&task=view&id=3894&Itemid=39

Dollar finished consolidating its recent gains and advanced against the majors across the board, posting new 2005 high against the Japanese yen as the pair broke above 114.00. However the overall feel for the market remains heavy, and while the trend mode remains, a new outlook emerges that the market may not be ready for a trend and another retrace might be in works. However a break of the summer ranges will most likely see the dollar remain in a trend mode.

<snipping charts>

EUR/USD – Euro bulls remained on a menu as the pair slid below the psychologically important 1.2000 figure with greenback longs setting their sights on 1.1876, a 2005 Low. As dollar bulls continue to capture more of the euro held territory, the next move to the downside will most likely see the pair head lower and test euros defenses around 1.1876, a level marked by the 2005 Low. A break of the current 2005 low at 1.1876 will most likely see the single currency surrender further ground to the greenback as it would confirm a dollar dominated trend and see the pair head toward the next major level at 1.1760, a 2004 Low. A further break in the single currency defenses will most likely see the pair test 1.1633, a level marked by the June 4, 2003 daily low. Indicators are favoring the dollar bulls with both momentum indicator and MACD below the zero line, while extremely oversold Stochastic adds to a trending outlook as most prolonged moves to the downside happened after oscillators became oversold.

<snip>

USD/JPY – Japanese Yen longs once again became a prey to the dollar bulls as greenback longs managed to push the pair above the 114.00 handle, thus establishing a new 2005 high during another bout of USD bullishness. As the price action remains in favor of the greenback longs, the next move to the upside will most likely see the pair head toward the Japanese yen defenses around 114.92, a 2004 high. A break above the 114.92 will most likely see the dollar longs push the pair above the psychologically important 115.00 handle and take on the yen defenses around 115.76, a level marked by the September 4, 2003 A further advance by the greenback bulls will most likely see the Japanese yen longs try to mount a defense around 116.67, a level marked by the July 15, 2003 daily high. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic most likely acts as a confirmation for the possible trend.

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Japan MOF says efforts needed to fight deflation

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-10-03T072150Z_01_TKU002197_RTRIDST_0_ECONOMY-JAPAN-HOSOKAWA.XML

TOKYO, Oct 3 (Reuters) - Vice Finance Minister Koichi Hosokawa said on Monday that the Bank of Japan's tankan confirmed the economy is in a moderate recovery, but work is still needed to fight deflation.

"The economy is still in deflation so there is no change in the fact that utmost efforts are needed to overcome it," Hosokawa told a regular news conference.

He said he believed the BOJ shared his view that it was important to acknowledge that the economy was still in deflation.

The tankan survey on Monday showed Japanese business confidence gained slightly in the latest quarter but was weaker than forecast as rising energy costs dampened sentiment.