11/30/2004

DAILY FX
Is Japan teetering on the edge of yet another recession? Yen bulls are starting to run out of excuses as tonight’s horrid eco data suggests that the Land of the Rising Sun may be close to the tipping point. With Industrial Production contracting by -1.6% versus 0.1% expected, Household Spending increasing a paltry 0.1% against 0.8% projected and Small Business Confidence falling to 48.9 – well below the key 50 level – economic indicators are furiously flashing a yellow warning. Japan is suffering from chronically weak domestic demand caused by declining wages in 40 of the last 44 months. This trend is now exacerbated by a global economic slowdown and a strongly appreciating yen both of which are affecting the country’s export income. Although BOJ has not intervened in the FX markets, the necessity to do so increases with every downtick in USD/JPY…..