Koizumi Wins Going Away!
"Well, last night that thought was confirmed when Japan's second quarter GDP grew 3.3%, triple the estimate by the so-called experts. Japan's got it all going on right now…"
By Chuck Butler In this issue… - The euro falls on the crosses.
- Japan's GDP grows 3 times faster than expected!
- Aussie dollars hit an 11-week high!
- The data cupboard gets emptied this week.
--- Advertisement --- Looking for the nation's best checking account? Everbank's FreeNet Checking Account at www.everbank.com is a Forbes "Best of the Web" pick for five consecutive years and ranked #1 by Bankrate.com! --------------------- And now… today's Pfennig! Koizumi Wins Going Away! Good day. I hope your weekend was grand. It was a tough weekend for the local football teams (Mizzou & Rams), but our Cardinals' magic number is down to six! Well, it's all settled in Japan. Prime Minister Koizumi did win going away and his LDP Party won more seats than was forecast. The yen did move to 109.1, but profit taking set in right away, as the yen has gained versus the dollar each of the past three weeks. The real gains for the yen came versus the euro and so, in turn, the euro lost ground to the dollar. Recall how in the past, I've explained the currency pairs and crosses and when major currencies make a move versus another, those losses or gains will be carried over to the other crosses the losing currency has outstanding. Yes, it's a little like when one person on the desk here gets a cold. By the time the month is gone, everyone will have suffered from that cold. So, the euro is trading at 1.2325 versus the dollar this morning and some of that loss to the dollar can be explained by the crosses, and some of it is coming from the fact that the challenger to German Chancellor Schroeder, Angela Merkel, has been losing ground in recent polls. What once was forecast as the demise of Schroeder, has turned into a neck-and-neck race. Oh, and did you see this story regarding the one of the states having to delay their votes for two weeks due to the death of one of the candidates? I commend them for delaying the vote, and not leaving a dead person on the ballot, like we did here in my home state a few years ago. Anyway, the final vote won't really be known for two weeks after the rest of the states cast their ballots. So, there could be a lot of hemming and hawing during those two weeks regarding the direction of the country, and that won't be good for the euro. The markets do not like uncertainty. And that's what they will have in Germany. OK. On to something else! Recall that I like to check in on the IMM futures positions each Friday? Well, not too much has been happening there recently, until Friday's report. The U.S. dollar position versus a basket of major currencies went short for the first time since April. It was not a significant short that would lead you to think that short covering could rescue the greenback. No, it was just a short enough to not impede further dollar losses going forward! The reason I found this move significant to talk about is the fact that it came one week before we see a ton of economic data that could really move the dollar. So, these speculators and hedge funds want to be short the dollar going into this week's data. So, with no further adieu…here are the broad strokes on the data this week. Tomorrow, we'll see the monthly trade deficit from July. It is expected to come close to $60 Billion. I think that it will pass $60 Billion! We'll also see PPI tomorrow. Wednesday, we'll see the retail sales report for August, which is forecast, right now, to come in at a negative: -1.5%. The Butler Household Index (BHI) tells me that retail sales will indeed be negative. Industrial production and capacity utilization will also print on Wednesday, while Thursday brings us CPI. And, then on Friday, we'll see the second quarter current account deficit, and the net foreign security purchases for July; two big data reports to end the week! Wow, that's a lot to chew on! I now see why the speculators and hedge funds wanted to be short the dollar going into this week. The debate on whether the Fed should or shouldn't pause this month due to Hurricane Katrina continues. Shoot, there was even a story on it in our local newspaper. I think that after this week's PPI and CPI, we'll still be left holding the bag of uncertainty. You know me; I think that CPI, as a measure of real inflation, is a joke! And then the media only picks up what economists call "core" inflation. You know, ex-food and energy… like we stopped using those things! Getting back to Japan for a minute…recall that I have told you repeatedly that the Japanese economy was growing steadily. Well, last night that thought was confirmed when Japan's second quarter GDP grew 3.3%, triple the estimate by the so-called experts. Japan's got it all going on right now… hint, hint. I began last week with talk of the Australian dollar, and how Bear Stearns had written a glowing report on the prospects of the currency. The Aussie dollar then went on to reach an 11-week high! The good news for people wanting to buy this rising currency is that the euro weakness has carried over to the other currencies, and Aussie is cheaper this morning than it was on Friday! Well, the Canadian dollar / loonie, did in fact reach 1992 waters on Friday, as it got below the 1.1770 level! We've seen some massive profit taking in the loonie since reaching that level, and now we need to see some dust settle on that profit taking before the next move up can come along. My trading backup, Jen, is off to Ireland this week. So, I've got a ton of trades to get working on. So, off to the big finish! Currencies today: A$ .7720, kiwi .7060, C$ .8450, euro 1.2325, sterling 1.83, Swiss .7975, rand 6.38, krone 6.33, forint 198.80, zloty 3.20, koruna 23.71, yen 109.75, baht 40.88, sing 1.6750, China 8.0924, pesos 10.70, and gold… $448.98 That's it for today. No data today, but tomorrow that changes. Wednesday, I'm sneaking out to go to the last weekday day game at Busch Stadium. The stadium is going to be torn down after the season, which hopefully will be after a World Series win for the Cardinals! I'll have more on the stadium at a later time when I'm feeling real nostalgic! I know; you can't wait! Have a great Monday and week! | 
