Your forexlive.com ENewsletter

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• Message to the BOJ: Don’t lose your head
• Japan – economic reform roadblocks
• Japan/China Radar dispute
• China – Inflation figures recap
• Diamond Fuji video
• ForexLive American wrap: Canadian jobs disappoint
• NASDAQ closes at highest since Nov 2000
• Euro longs mount in latest CFTC positioning report
• Venezuela devalues currency to 6.3 per dollar from 4.3 per dollar
• Best trade this week: The EUR/GBP retracement
• EUR/CHF on wobbly legs but holding weekly low
• Thanks for all the support this week
• Canada’s Harper expects 2013 jobs trend to be positive
• Snow on the radar
• The best economic forecasts of 2012
• Fitch affirms Spain BBB, outlook negative
• Euro inching toward lows
• FSA’s Turner says UK growth set back a decade
• European equity close: Green day
• Cameron says budget to be cut to 908B euros

Message to the BOJ: Don’t lose your head Posted: 08 Feb 2013 08:14 PM PST Not until the 19 March, that is, when Shirakawa resigns. Who's in the running as new head? two former deputy governors have emerged as favorites within the financial markets, a survey of 11 analysts by Dow Jones Newswires showed votes basically split between Kazumasa Iwata and Toshiro Muto, with Mr. Muto a single vote ahead. Haruhiko Kuroda, president of the Asian Development Bank and a former finance ministry official, got two votes, Takatoshi Ito, a University of Tokyo professor well-known in international academic circles, got one. Mr. Iwata, now the chairman of a think tank: known for a radical idea to push down the yen: setting up a fund to invest in foreign bonds Mr. Muto, now chairman of the Daiwa Institute of Research, see his 37 years as a civil servant: He has said the BOJ should consider stepping up purchases of domestic government bonds, especially notes with longer maturities, if another threat to the nation’s economic outlook emerges. Wall Street Journal: Handicapping the BOJ Candidates (Gated – a news search on the headline may turn up something).

Japan – economic reform roadblocks Posted: 08 Feb 2013 08:14 PM PST Its early weekend so I haven't any breaking news, but here's a little about some of the challenges facing those pursuing economic reform in Japan as part of the battle with deflation. LDP ranks, like-minded lobbies rally against TPP About 120 members of the ruling Liberal Democratic Party joined major lobby groups for a rally Thursday to oppose participation in the U.S.-led Trans-Pacific Partnership free-trade talks, stepping up pressure on the Abe administration to maintain barriers on sensitive items in the farming, fishing and medical markets. Almost twice as many Diet members showed up for this rally than a similar meeting last month.

Japan/China Radar dispute Posted: 08 Feb 2013 08:14 PM PST Japan may release data it says will prove a Chinese naval vessel directed its fire control radar at a Japanese destroyer near disputed islands in the East China Sea, local media reported. Japan will consider how much normally classified data it can release, the media reports said, citing comments by Japan Defence Minister Itsunori Onodera on local television. Reuters Also: Chinese maritime surveillance vessels made apparent preparations last year to deploy helicopters inside Japanese territorial waters, which would have directly challenged Japanese sovereignty and put Tokyo in a bind as to how to respond, sources, including former Defense Minister Satoshi Morimoto, said. China helicopters pose new threat to Senkakus sovereignty

China – Inflation figures recap Posted: 08 Feb 2013 08:13 PM PST The mainland’s inflation rate eased from December’s seven-month high to just 2 per cent year on year in January but economists warn of greater inflationary pressure ahead. producer price data had shown a steady upward trend since September, signalling a recovery in raw material prices, which would be passed on to consumers by mid-year. Mainland inflation down but signs of rising pressure

Diamond Fuji video Posted: 08 Feb 2013 08:13 PM PST Twice a year, the sun sets directly behind Mount Fuji. Video courtesy of The Japan Times from February 8:

ForexLive American wrap: Canadian jobs disappoint Posted: 08 Feb 2013 01:56 PM PST Canada employment -21.9K vs +5K exp EU reaches budget agreement through 2020 US trade deficit $38.5B vs $46B exp Canada housing starts hit lowest since 2009 US wholesale inventories -0.1% vs +0.4% exp S&P 500 +0.5% to 1517, hits 5-year high S&P 500 up 0.3% on week NASDAQ closes at highest since Nov 2000 JPY leads, CAD lags The euro closed near the lowest levels of the week and the lowest since Jan 25 at 1.3364.

NASDAQ closes at highest since Nov 2000 Posted: 08 Feb 2013 01:02 PM PST From one bubble to the next.

Euro longs mount in latest CFTC positioning report Posted: 08 Feb 2013 12:33 PM PST Weekly speculative futures positioning as of the close on Tuesday in the Commitments of traders report: EUR long 38K vs 27K last week JPY short 68K vs 71K last week GBP long 1K vs 11K last week AUD long 81K vs 85K last week CAD long 27K vs 35K last week CHF long 4K vs 4K last week Euro not longs at the highest since July 2011. The smart money doesn’t seem so smart on this trade. Longs have been hit since Tuesday’s close. The other takeaway might be CAD positioning which has crumbled from +70K since mid-January. USD/CAD is up 1.5 cents in that time but given the rapid shift in sentiment, I would expect it to have moved more. You could interpret that as a bearish sign for USD/CAD.

Venezuela devalues currency to 6.3 per dollar from 4.3 per dollar Posted: 08 Feb 2013 12:18 PM PST

Best trade this week: The EUR/GBP retracement Posted: 08 Feb 2013 12:12 PM PST Short EUR/GBP was the best trade this week, in percentage terms. The pair came into the week close to 0.8700 and finishes it close to 0.8450 — a roughly 250 pip drop. The large red bar on the weekly chart follows four weeks of gains and signals the potential for a deeper retracement. I think this is still a buy-the-dips trade but cautions is needed in the near term. A level to watch is 0.8330, which is the 61.8% retracement of the rise in 2013. If that breaks, we could see a drop down to 0.8200/0.8160.

EUR/CHF on wobbly legs but holding weekly low Posted: 08 Feb 2013 11:48 AM PST I’m hesitant to draw lines on the EUR/CHF chart because it’s not a true market. My opinion is that the SNB has been selling euros to lighten its enormous position. Official reserves for the end of January were virtually unchanged from December at 434 billion francs but they could be using forward agreements or other derivatives to begin unwinding their position. Moreover, the most-recent decline began after the turn of the calendar into February. That said, EUR/CHF has fallen below the 61.8% retracement of the jump in mid-January but hasn’t closed below it. Today the pair also matched the Feb 5 low of 1.2256, raising the possibility of a double bottom. From a purely technical perspective (and I’m not sure that’s the way to trade this pair), there is a case to be made for selling this pair on a break of 1.2256 or buying it if it holds.

Thanks for all the support this week Posted: 08 Feb 2013 11:08 AM PST It’s been a busy week in markets and around ForexLive. One thing we can always count on is having the best audience anywhere.

Canada’s Harper expects 2013 jobs trend to be positive Posted: 08 Feb 2013 10:41 AM PST CAD is the laggard today after 22,000 jobs were lost in the January employment report. It’s the first negative number since July and Canada is averaging a healthy 27,000 jobs/month over the past six months. All of the declines were in the public sector (especially educational services) so it shouldn’t throw up red flags about the economy. Here is the take on the report from TD Economics: The Canadian job market fizzled to start the New Year. This should not have been a surprise to anyone. Labour market data in Canada are notoriously volatile and it is hard to infer trends even with a few months under your belt. If we use economic momentum and indicators as our gauge, job creation should come in around 10,000-20,000 in the next few months.

Snow on the radar Posted: 08 Feb 2013 10:05 AM PST The forecast here is for a quiet US afternoon because of the snowstorm that’s moving in.

The best economic forecasts of 2012 Posted: 08 Feb 2013 09:33 AM PST The best economic forecaster of 2012 forecasts just 1.9% GDP growth in 2013 and a miniscule dip in unemployment to 2013, according to the Wall Street Journal. That’s right on the 7.7% consensus and very close to the 2.0% GDP median estimate.

Fitch affirms Spain BBB, outlook negative Posted: 08 Feb 2013 09:09 AM PST Affirmation reflects expectation debt will remain under 100% of GDP. S&P rates Spain BBB- while Moody’s has a Baa3 rating of Spain, both with a negative outlook.

Euro inching toward lows Posted: 08 Feb 2013 09:05 AM PST Europe is closed for the week but we’re seeing a bit of a drag on the euro as it tests the earlier 1.3360 low. Demand stretches to 1.3350/50 with more bids at 1.3340.

FSA’s Turner says UK growth set back a decade Posted: 08 Feb 2013 08:46 AM PST UK per capital GDP won’t reach 2007 level until 2018

European equity close: Green day Posted: 08 Feb 2013 08:34 AM PST UK FTSE +0.5% German DAX +0.7% French CAC +1.2% Spain IBEX +1.8% Italy MIB +1.4%

Cameron says budget to be cut to 908B euros Posted: 08 Feb 2013 08:14 AM PST Cameron says budget will cost less than 1% of EU gross income Deal is better than ‘institutional wrangling’ Van Rompuy says the budget has 68B euros for youth employment. The rest of the leaders are congratulating themselves on the deal.

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