Bank of Japan

The saga continues with those who have become the head of the Bank of Japan ...

The saga continues with those who have become the head of the Bank of Japan. The most probable candidacy in the matter, Toshiro Muto, said on Tuesday that he intends to defend this post independence of the Central Bank in making all decisions on what should be the monetary policy (in the past can hardly believe that). This issue can finally be closed (Muto is approved or not) for 14 or 18 March. I, like, have to go into more detail of the issues, there will be another chapter in the future BOJ intervention on currency or decline, rising interest rates, but, in my view, a decisive influence on the position of yen in FOREX now can provide, especially , the attitude of investors to risk or to carry trade, and what will stop in more detail.

It remains the best indicators of investors' attitudes to risk should consider the current momentum of world stock markets, as well as yield Treasuries. In the first case it is sufficient to draw attention to yesterday's closure of the U.S. stock market, where indexes lost more than one per cent (Dow-Jones -1.29%, S & P500 -1.55% -1.95% Nasdaq Composite) to understand that " "bull trend on the yen is not accidental. Based on the working hypothesis that the S & P500 has a strong chance to decline until 1230 or even 1190, 1200, I would be morally prepared for the fact that a pair of USD-JPY may well try protknut familiar, we support 101.50, 60, went to 100. However, a certain idea is to try to play to increase the USD, JPY from current price levels, it should be recognized all the same there.

Again, in a working idea, I would have remembered that the next possible rate reduction in the United States at 0.75%, 1% within the next Fed meeting or extraordinary support could greatly world market shares, causing them to rise 1-2 days, which, in turn, would ease for a few trading sessions position yen or franc. No less positive for Equities, however, can also be a good statistics from the United States this week, if it is. This largely relates to data on retail sales in the United States on Thursday. Given favorable scenario of events the USD, JPY could recover up to 105.

June futures on the price of ten-year treasury bonds (daily chart).

Add that on Tuesday morning, we see some attempt futures on the American stock indices, with the result that at the same FOREX cross-rates AUD, NZD and JPY \ JPY skorrektirovatsya trying to lower on Monday. In doing so, the Australian currency looks at the beginning of this week somewhat worse than New Zealand, which may be due to the fact that the index of business sentiment in Australia from National Australia Bank in February went below zero again, reaching -2 item, which shows pessimistic mood among business people.

Certain negative for AUD may also be tense situation at the national credit market, vyrazivshayasya in lending rates before takeoff maximum values from the mid 90 - ies. If a daily infusion of money into the market through repo operations of the Central Bank of Australia nuzhnoo not bring results, and to the same situation on foreign markets will continue to deteriorate, it may well be time to go talk about downside risks to the Australian economy and falling interest rates in the region. In the meantime, note that in AUD, USD within the framework of a long-term rising trend has some foundation in the area of support skorrektirovatsya 0.89, 0.90 in March and April.

But one of these indicators should carry trade take on commodity price market. Until very clearly see the outflow of money from stock investor in commodities, which ultimately will, and it became one of the main reasons for the take-off in oil prices prior to $ 108 a barrel. It is not ruled out that "bull" trend in commodities will continue at least several more months, given that, firstly, we have not seen any signs of a turn for the U.S. stock market, and, secondly, Due to the fact that the subject of write-offs, "sabpraym" still scares investors. Barclays Recent studies indicate that 34% of the 260 institutional investors polled consider it appropriate in the next three years, about 10% of its assets placed in raw materials. Another indicator of this kind of sentiment can be further inflow of funds at the site where treated commodity futures.

As a conclusion, it can be assumed that began in spring will have to play at least in kratkosrochke at improving on raw materials. Here, it is true, too, much is about what it would be Fed monetary policy. First, I would immediately made an amendment to the fact that commodities are now actively buy under the imminent decline% rate, so by the fact the decline could start fixing some profits in raw materials, and, secondly, would monitor the situation in China, where inflation at 11 - a maximum of summer could mean further tightening of monetary policy in the region, as a result, higher interest rates and eventually to some correction in commodities. Also, I would have tried to refrain from positions on the sale of gold and oil, given that there, and there is this game will go on lowering counter to the prevailing trend.

Regarding the FOREX Market, the take-off in commodity prices may mean the following:
expensive oil will facilitate the continuation of the rising trend in EUR, USD, as the ECB will continue through the growing rate of the national currency to prevent a possible strengthening of inflationary pressures in the region;
commodity currencies (AUD, NZD, CAD) can get with the times even more "fed" on the part of commodity platforms, especially in the long term could manifest itself in the currency pairs, where there is a AUD and NZD;
Bank of Japan may accept a further strengthening yen rate, that is, with an even greater decline in the cross rates XXX, JPY, because only in this way can be purchase for the national economy and, in particular, to manufacturers of raw materials and household inflation and gasoline;
in the long period of expensive raw materials will mean even greater increase in inflation in some economies the world, which ultimately may mean already increasing, rather than reducing interest rates in the United States in 2009.

With regard to upcoming auctions in London and Frankfurt, the cross-rate EUR-CHF can continue to grow, recover to a decline on Monday when a) statistics from Germany (ZEW Economic Expectations Index) at 13:00 Moscow time would be better expectations for March ( Forecast -40, previous value -39,5) b) European stock indices, as well as futures on indexes stabilized USA at the upcoming European trading session and would not fall. Good statistics in Europe might lead to the purchase and in a pair of EUR-USD.