Yen Extends Slide Wednesday, September 20, 2006
The yen extended its post G7 slump against the majors, dropping to a 5-month low versus the dollar past the 118-level and drifting toward the 150-level against the euro. The whipsaw action in the Japanese currency was attributed to comments from European officials about excessive yen weakness being unwarranted. Nevertheless, the G7 communiqué refrained from naming Japan, instead singling out only China in its calls for a more flexible currency regime. As such, traders capitalized on higher yen levels to reinitiate shorts against the euro, sterling, and dollar.
The greenback lost ground versus the euro on the heels of a larger than expected US current account deficit. The Q2 deficit exceeded forecasts of a rise to $213.0 bln to $218.4 bln, and up from Q1 at $208.7 bln. Traders will turn their attention to inflation and housing data due out on Tuesday. The August PPI is forecasted to remain relatively tame, edging up marginally to 0.2%, from 0.1% a month earlier. The core PPI is expected to reverse last month’s 0.3% decline to 0.2%.
The housing market is anticipated to have slowed further in August. Housing starts in August are seen decline to 1.75-mln units, down from 1.795-mln units. Building permits are forecasted to fall to 1.75-mln units versus 1.763-mln units previously.
The greenback lost ground versus the euro on the heels of a larger than expected US current account deficit. The Q2 deficit exceeded forecasts of a rise to $213.0 bln to $218.4 bln, and up from Q1 at $208.7 bln. Traders will turn their attention to inflation and housing data due out on Tuesday. The August PPI is forecasted to remain relatively tame, edging up marginally to 0.2%, from 0.1% a month earlier. The core PPI is expected to reverse last month’s 0.3% decline to 0.2%.
The housing market is anticipated to have slowed further in August. Housing starts in August are seen decline to 1.75-mln units, down from 1.795-mln units. Building permits are forecasted to fall to 1.75-mln units versus 1.763-mln units previously.
Labels: Japnese Yen
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