The Japanese yen continues to hover near multi-year lows against several major crosses as carry trade remains the flavor of the day. With a light global economic calendar, investor attention is focused on yield differentials, and the yen is the low-yielding currency of choice to finance trades.
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[B]HEADLINES:[/B]
- [B]Q2 Tankan Index Expected to Remain at 2-Year High[/B]
"Quarterly Tankan Large Manufacturers index of confidence is estimated to remain at the Q1 level of 23, as increased capital investment is expected to bolster economic growth."
Bloomberg - Are you a robot? - [B]Third Straight Month of Decline in Japanese Department Store Sales
[/B]Department store sales continue to slide for third consecutive month, down 0.4 percent month-on-month compared to the prior year, as stores in rural areas take a hit. Sales at Tokyo department stores recorded the first increase in eight months, rising 0.7 percent from last year.
http://www.forbes.com/business/feeds/afx/2007/06/19/afx3833617.html - [B]First Economic Plan Specifies Policy Goals[/B]
The first economic strategy report released during the tenure of Prime Minister Shinzo Abe highlighted trade and public spending as key policy instruments.
http://hosted.ap.org/dynamic/stories/A/AS_FIN_JAPAN_ECONOMY_ASOL-?SITE=YOMIURI&SECTION=HOSTED_ASIA&TEMPLATE=ap_national.html
[B]JAPAN MARKET ACTIVITY[/B]
[B]Currency Markets - JPY:
[/B]The Japanese yen continues to hover near multi-year lows against several major crosses as carry trade remains the flavor of the day. With a light global economic calendar, investor attention is focused on carry trades, with the yen acting as the low-yielding currency of choice to finance trades. Yen crosses with the Swiss franc is approaching a major resistance line, though many of the others are comfortable pressing to new highs. The yen made a modest recovery specifically against the euro as weaker-than-expected investor confidence in Germany led the euro to fall 0.1 percent to 165.68 versus the yen, from a four year high of 165.91 on Monday.
[B]USD/JPY (Daily Chart)
[/B](Source: Bloomberg)
[B]Equity Markets - Nikkei 225 Index:[/B]
The Nikkei 225 Stock Average managed to fare well, closing at 18,631.61, up 0.1 percent or 14.09 points, despite the ramifications of a recent rally in oil prices. The Nikkei stayed steady as declines in stocks of electric utility companies and financial institutions were offset by gains in shares of paper manufacturers and shipping companies. Tuesday marked the fourth consecutive day of gains in the Nikkei, fueling speculation that the index may edge towards the seven-year high of 18,215.35 set on February 26.
[B]Nikkei 225 Index (Daily Chart)
[/B](Source: Bloomberg)
[B]Fixed-Income Markets - Japanese 10 year Government Bond Futures:
[/B]Government bond yields emerged out of a three-day slide, closing at 1.92, up 3.5 basis points from Monday?s close of 1.895. At the beginning of the US session today, bond yields declined below yesterday?s close in tandem with the fall in US Treasury yields. Longer-term bonds yields then resumed an upward trend, possibly because brokerage firms are reducing government debt holdings in anticipation of lower prices at the June 21 auction of 800 billion yen worth of Japanese government debt.
[B]Japanese Government Bonds (Daily Chart)
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(Source: Bloomberg)
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