News Index - 23 October, 2006

Japanese Forex Trading Preview by Korman Tam

The greenback remains firm against the majors heading into the week on the heels of Friday’s jobs report. Although the headline September payrolls figure was sharply lower than expected at 51k, a large revision to jobs created in August from 128k to 188k propped the dollar to multi-month highs. Strength in the labor market alleviates pressure from declines in the housing market, thereby enabling the Fed to maintain its bias against inflation and ultimately leaving the door open for further policy tightening. Nonetheless, we do not anticipate additional Fed rate hikes over the remainder of the year and deem the next move to be a shift toward monetary easing.

There are several key events in this holiday-shortened week, with markets closed in Japan and Canada on Monday. The US bond market will also be closed on Monday in observance of Columbus Day. US economic data slated for release consist of the August trade deficit, Fed’s Beige Book, September retail sales, and October University of Michigan consumer confidence. Additionally, traders will focus on the FOMC minutes from the September meeting and speeches from Fed Board Members Bies, Lacker, Mishkin, and Moskow.