FX Closing Comments

Short Lived Gains

The Japanese Yen made a small headline today despite very low liquidity. Industrial production missed expectations for the month of November, rising only 0.7% against estimates of a bullish 1.0% rise, this made the annual rate drop to 4.8%. Upon further reading, the report sounded quite positive with export shipments above October's numbers and inventories supplies also gained. Meanwhile, labor cash earnings plunged 0.7% during November, leading the annual rate to fall negative for the third time this year at -0.2%. In addition to the Japanese Industrial Production numbers, a detailed report from the Japanese Ministry of Health, Labor, and Welfare showed that actual earnings dropped 1.1% from last year, this normally means that families are seeing almost no payroll growth. On the whole, the Japanese data continues to indicate that producers are benefiting from export growth but are not passing the profits onto their employees. What this did to the markets was the following. The USD / JYP was trading in the 118.95 range before taking a larger dip on the bullish Japanese numbers. Then the pair reached today's lows of 118.51 before springing back to 119.05. While the initial reaction to the news was considered correct, a rebound towards the US Dollar was not a normal reaction. This could have been caused by the relativity low volume that is normally associated with the holiday season. David Hilgeman