U.S. Dollar Mixed; No sign of Japanese Intervention

The U.S. Dollar is trading mixed against most major Forexmarkets, posting gains against the commodity-linked currencies and lossesagainst the Euro, Yen and Swiss Franc.

The U.S. Dollar is trading mixed against most major Forexmarkets, posting gains against the commodity-linked currencies and lossesagainst the Euro, Yen and Swiss Franc.

Early in the session, the Dollar was trading a littlefirmer, but was unable to hold gains after Japanese second-quarter grossdomestic product data showed the nation’s economy slowed to a crawl. Thesluggish GDP report helped Chinamove up to become the world’s second largest economy.

The reported slow down in the Japanese economy also may havestrengthened the government’s case for a weaker Yen. For weeks the governmenthas warned that the high price of the Yen may be damaging demand for Japaneseexports, thus hurting the economy.

At the close on Friday, the Yen posted a reversal bottom forthe week. This was an indication that traders were looking for a possibleintervention. The lack of follow-through to the upside means this reversalbottom has not been confirmed.

The main driver in the Dollar/Yen market the past fewtrading sessions has been the anticipated moves by the Japanese government andthe Bank of Japan. So far all the rhetoric has amounted to a “verbalintervention”, but this has been enough to scare the weaker shorts intocovering their positions.

This week Prime Minister Naoto Kan and central bank Governor MasaakiShirakawa meet to discuss the value of the Yen and its effect on the economy.Look for increased volatility in the Japanese Yen as traders try to forecast thegovernment’s and BoJ’s next move.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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