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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (956)	5/2/2000 12:50:00 AM
From: John Pitera	Read Replies (3) \| Respond to of 33421

looks like the Yen is coming down again the buck and other currencies and there are fundamentals to support this thesis. Swedish rates going up, in accordance with the global trend. UK rates may be going up 25 basis pts on thursday as well. I think that the low is in for the AUD. I see a pretty clear 5 wave down. I'll see about doing a chart or tw0. John ------------- ----FXfocus: The story in the foreign exchange market is obviously the recent weakness in the yen. What is so interesting this time around is that the reversal seems much more credible when considering the shift in sentiment toward a near-term economic recovery in Japan. Such sentiment is easily evidenced by the fact that three month September Euroyen futures have shed 11 bp since mid-April when BoJ Gov Hayami first hinted at a shift away from the zero-rate policy. While we still have some concern about the fact that the easy interest rate environment may keep recovery hopes alive, there is some speculation that foreign investors may be tired of waiting for the next significant push higher, particularly in the wake of last year's gains. We have highlighted the fact that foreign investors have been better sellers of Japanese equities as of late, but it is important to remember that all of the recent global fund manager surveys have revealed overweight positions in Japanese equities, which when combined with extremely supportive technicals, suggests that yen may finally be headed back towards reality.------- ----------- ----Today was about as boring as you get in the Treasury market, as overnight flows were pretty much nonexistent with Hong Kong, Singapore and Europe on holiday. ----- -------- ----Other than the BOE, the Swedish Riksbank is also set to meet this Thursday amidst mounting speculation they too will raise rates between 25 to 50 bps from the current 3.75%.with a 50/50 probability. Like the UK, Swedish domestic demand remains very strong (Feb retail sales +9.4% y/y) but to an extent this has been offset by still moderate inflation (2.1% y/y, 1.1% y/y core). At the last meeting on March 22nd there was a 4-2 split to leave rates unchanged. Whilst the split clearly infers some contention on the issue, it should be noted that the governor has not prepared the markets for a move which is unusual...more----- -------------- . ---- While the market has been more aggressive in pricing in a 50 bp tightening, seasonals provide a bit of near-term steepening support, particularly against the belly. More importantly however, is the fact that sentiment will likely swing back in favor of a continuation of the incremental tightening cycle. -----