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

To: hobo who wrote (4048)	6/11/2001 11:23:20 AM
From: John Pitera	Respond to of 33421

The USD gets a safety boost, since the US is that only global superpower, the past decade, and we have been reducing the budget deficit which usually helps a currency strengthen. here is some more on Japan's structural reforms from Briefing. As we've seen the rally in the Yen from the early April Lows has stalled out as we got to Memorial Day. -------- Today's sell-off in the yen is not just about the weaker than expected Q1 GDP data, but also about its implications for structural reform. Q1 GDP fell 0.2% q/q versus expectations of a 0.2% increase. Domestic demand contributed nothing to first quarter growth, while net exports actually subtracted 0.2%. Private demand fell 0.5%, while residential investment fell 5.2% and business investment fell 1.0%. The only signs of strength were seen on the public side of the equation, as public demand rose 1.6% with the help of a 5.2% increase in public investment. A combination of public strength and private weakness is definitely a blow to aggressive reform prospects, as it suggests that there may be less willingness to accept the resultant deflationary pressures. Already, there has been some focus on moving the onus for recovery back to the demand side, as the BoJ has been asked to further ease policy. Aside from the potentially favorable currency implications of such a shift, Treasuries may also be able to receive a boost from an unwinding of some of the reform-related euphoria in the Nikkei.