Not a whole lot of action today but the Dollar bearish tone has indeed took over this week following up on last Friday’s position squaring. The Euro is the big gainer this week gaining not only against Dollar but also against Sterling and Yen. This divergence is made clear by the fact that USD/JPY faltered and reversed course while EUR/JPY easily broke 165 even with some hawkish minutes from the BOJ meeting. The Bank of Japan minutes were quite interesting in that one member voted for a rate hike and contended that the sub prime risk was only one of the threats to the Japanese economy and there was a good chance of leaving rates too low for too long. The BOJ also said that new building codes were the main motivator for the slowdown in building permits and construction. Also of merit was the statement that corporate costs would start to be passed onto consumers and that public perception was that there is inflation afoot. Meanwhile EUR/GBP reached all time highs, which may not come as a shock since the Pound is on the defensive across the board. Still this sends a statement that the Euro is the new dollar the new king currency and it helps to make the case for the Amero’s introduction. Gold and silver really took off today as further proof that the dollar has lost respect. Tomorrow’s 8:30 am release of U.S. durable goods should be a big market mover, expect some fireworks and potentially a penny move or better. I have doubts that this number will help the dollar out at all. It would not surprise me to se the dollar fall considerably on this news. Then tomorrow evening at 6:30 pm the Japanese jobless rate and CPI will be released. It will be interesting to see if CPI has increased due to inflation perceptions and pass through price increases as was feared in the minutes. My guess is that it will and that the Yen will gain because of it. At 12:30 am tonight housing starts are released from Japan though which could be decidedly bearish for the Yen making it an even better buy tomorrow evening.
