Daily FX Wrap Up

Japan's Watanabe

"Given that the Japanese economy is improving, there are no reasons related to Japan for its currency to weaken,'' Vice Finance Minister Watanabe said at a press conference in Tokyo today. He said foreign exchange levels are determined by the relative strength of economies. The Japanese, U.S. and European economies will all converge at a pace of about 2 percent later this year or early 2007". He declined to comment on the current level of the yen and its direction. "I won't comment on whether the currency's move is good or bad or stays within a certain range," after being asked about the yen's gain since Oct. 27, when reports showed U.S. economic growth slowed to 1.6 percent in the third quarter. Watanabe said, "The issue of global imbalances will probably be touched on at a meeting of finance ministers and central bank governors of the Group of 20 nations to be held in Melbourne this month, though it won't be a major topic. Financial leaders probably won't come up with solutions to global imbalances or lopsided flows of funds and exports in the world economy". Given the strong resolve and strong numbers that Japan has produced, there seems to be overwhelming opinion that Japan's currency will remain if not increase against the majors and especially the US Dollar. The Yen gained a little today against the US Dollar in otherwise tight trading ranges. These strong opinions about the Yen value has lead many traders to look for a further Yen bull market. It appears that most experts have become comfortable with a stronger yen and a longer term bearish US Dollar. XPRESSTRADE Analyst David Hilgeman