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DON'T CONFUSE INTERVENTION WITH QE in the case of Japan. Japan's Fin Min Noda made it clear last week that any yen intervention would make little difference and that chances of US stepping in were "zero". So Japan is now moving in the way of further QE as was seen in December when the BoJ's fresh...

US Q2 GDP REVISED down to 1.6% (vs. exp 1.4%) from advanced 2.4% reading, triggering a relief rally in equities and BROAD YEN SELLOFF, especially since the Japanese currency has been already hit by: i) fresh political fallout in Japan and ; ii) escalating signals of a looming stimulus package...

WHEN MARKETS TAKE A BREAK from the recent selloff, FX traders pick among USD, JPY and CHF as the safe haven currencies to sell. JPY is hit hardest on a combination of a bounce in Asia and European futures after the Jpns govt urged the Bank of Japan to ease the yen as part of an upcoming stimulus...

More disappointing US housing figures are unlikely to further boost USD on risk aversion because (i) prolonged US data deterioration bolsters the case for a fresh asset pruchases from the Fed; and (ii) of the latest upside surprise in German August IFO survey. While the latest 3-year high in...

JAPAN & GERMANY in the spot light, with the Japanese making more ineffective talk regarding the yen and German Aug IFO due at 8 am GMT. More on IFO below. Talk that the the BoJ may hold an extraordinary meeting to consider additional monetary easing is not helping to weaken the yen, while Japan...

ITS ONLY TUESDAY as JPY makes the transition from rising to soaring amid inaction from Japanese officials. Readers of this website have been warned of 81-80 in USDJPY since January before it was fashionable to do so. Cracks inside the FOMC about renewing QE, forecasts of a possible UK recession by...

CANADA JUL CPI is the only data item of the day, further inflation softening could add to CAD selling especially in the event of prolonged declines in appetite. Watch the annual core CPI (exp at 1.8% from 1.7%). USDCAD 3-hr shows immediate TL resistance at 1.0420, a break of which seen extending...

YENs TRADE-WEIGHTED INDEX http://chart.ly/4dt85t the chart in the link is Deutsche Banks JPY Traded-Weighted Index, showing the currency testing the highs of January 2009. Despite the similarity of the price pattern with Jan 2009, there are differences. GLOBAL BOND YIELDS TODAY are dragged by a...

US JUL INDUS PRODUCTION +1.0%, twice more than expected, with capacity utilization rising at its strongest pace since Sep 2008 at 74.8. YEN CROSSES seen making the best of the day as Japanese intervention is in focus. NZDJPY eyes 61.20, CADJPY seen at 83.20. AUD builds on gains after a neutral...

JPY CHF USD BALANCE OF POWER is being dominated by the Swiss franc as Japans Q2 GDP slows to 0.1% from 1.1%. Despite the news, JPY is second best performer of the day as Asian/European bourses remain in negative territory, while S&P500 watchers await whether the index further drops below its...

YEN EXTENDS PULLBACK as markets stabilize, while CHF takes over from the Japanese currency, reminding us the Swiss safehaven is here to stay. The latest comments from Japanese officials about excessive yen moves have not been sufficiently potent as markets widely believed intervention will not be...

HOW WILL USD FARE DURING DEFLATION? It depends on what is the reason to deflation and whether it is accompanied by substantial deleveraging in the markets as was the case in 2008-9. The last time we had GROWTH-DRIVEN deflationary fears (2002-3), the US dollar was under severe pressure. But that...

USDX DROPS As Feds message was not lost in translation as it announced a fresh dose of treasury purchases from the principal payments of Agency securities. The resulting selloff in the US dollar and bounce in equities reflected the markets clear understanding that QE2 has been unveiled. =======...

Pay attention to the EU-USD Spread of Libor rather than isolating EUR & USD libor. ...

YEN TAKES OVER as stocks retreat across the board and especially by the fact that markets are paying less attention to Japanese policy makers who indicate that theyre closely watching currency yen movements. FALLING BOND YIELDS are also helping to boost the yen as the US 2-year yield hit a new...

YEN STRENGTH EXTENDED overnight after Japanese govt officials said a rising yen should be dealt with monetary policy rather than intervention. The 158-pt decline of the Nikkei-225 is largely the result of currency strength. As European equities and US futures dip into negative territory; EURJPY,...

Yen strength is here to stay especially as the US dollar's safe-haven lustre is eroded by the worsening US data. ...

GLOBAL EQUITIES STRUGGLING again after the 1.7% intraday gains in Wall Street were halved by end of session, translating into lower sessions in Asia. This propped USD and JPY back up against most currencies, but continued to weigh on USDJPY, which I continue to project below 85 in late Q4. USDCAD...

JAPAN MAY BE out of the World Cup, but the yen is doing its usual cheer of the 3% fall in Wall Street. Portugal's World Cup team was outplayed and downgraded by Spain's marvellous Villa, while the euro finds its way below $1.22. Stocks' foray above their 200-day MA was as durable as England's...

EMERGING MARKETS TAKING OVER IN FOOTBALL (Soccer) as the Latin American nations (central & south American) put up a valiant display in the 2010 World Cup in South Africa. (by order of display & performance) Argentina, Mexico, Brazil, Uruguay, Paraguay and Chile all did very well, while South...

RECURRING INTERVENTION TALK ABOUT SNB as EURCHF jumps 70 pips from $1.3746 low, prompting EUR crosses higher across the board, including EURUSD at 1.1980s. EURCHF seen capped at 1.3910. Japanese Finance Ministry officials also jawboning as they issue the standard warning against excessive...

Ashrafs interview on JAPAN's SWELLING DEBT http://bit.ly/cvvcqE Ashraf on EURO's BARGAIN TRAPS http://bit.ly/bux3eF Ashraf on GOLD's UPSIDE http://bit.ly/ahGryb Ashraf on the USD's WORST KEPT SECRET http://bit.ly/9vhpzH ......

GBP or CAD? We noted yesterday CADJPY and GBPJPY were the likely aggressive gainers on a combination of Japanese political uncertainty, improved risk appetite and robust UK and CA data. GBPJPY breaks above May 10 trend line, now eyeing 135.90, while CADJPY could potentially extend gains towards...

ANOTHER JAPANESE PM BITES THE DUST, this time PM Hatoyama steps down over the destabilization of his tripartite coalition govt resulting from his failure to move the US military base out of Okinawa. Both JPY and USD had recovered in afternoon NY trading as US stocks ended in the red. Markets turn...

YEN BIGGEST LOSER in Asian trade on a combination of improved risk appetite and a split in the Japanese govt coalition. Japans Social Democratic Party has exited the tri-partite coalition (SDP, DPJ and PNP) after the DPJ's decision to allow the US military base to stay in Okinawa rather than have...

US dollar remains off its Friday lows ahead of the US March services ISM survey (10:00 EDT, 14:00 GMT) and the anticipated Fed Governors meeting at 12:30 EDT (16:30 GMT), which is highly expected to produce a 25-bp increase in the discount rate to 1.00%. This will reduce the spread between the...

More yen weakness emerges as the Bank of Japan doubles its 3-month lending facility to Yen 20 trillion. Although the amount was within market expectations, the MoF has made its intentions clear to battle deflation and fight excessive yen strength. USDJPY is still seen breaking 91 and onto 92 w/in...

FOMC kept all rates unchanged, while Kansas Fed's Hoenig remained the sole dissenter against the view of exceptionally low federal funds rate for an extended period? The knee-jerk reaction was for the USD to drop (after low rates mantra was kept), but equities are unable to return to the session...

JPY weakness broadens amid expectations that Wednesdays announcement from the Bank of Japan will renew the case for quantitative easing. Reports that Japanese FinMin Kan would use FX reserves to fund DPJ programs were later denied but some sources say there may be some truth to them. USD weakness....

The Australian Dollar is trading within a wedge formation vs the US Dollar, British Pound, Japanese Yen and the euro. Price-action is also diverging against 4-hourly MACD, which hints of a possible reversal. Below .9140 (AUD/USD) will confirm that a larger correction is in store. Meanwhile, a...