At least for the next half a year the situation is likely to remain tough. |
Everyone is waiting for an end to the tightening cycle, so that's why the dollar is vulnerable. |
Expectations of further Fed rate increases haven't peaked yet, while rate hikes by the Bank of Japan are a long way off. Along with Japanese investors continuing enthusiasm for overseas assets, that will likely push up the dollar in coming weeks. |
Fukui is smoothing the way to end its deflation-fighting policy by making those comments. Having that clear goal, he is persuading politicians and the market. |
Good economic figures will surely be euro supportive. The euro-zone economy is expanding faster than expected. |
He hasn't done any reforms yet, so they would like to see the results. |
He's likely to make more bullish comments on the economy and deflation. That will put upward pressure on short-term interest rates, which is yen positive. |
In general reducing the public debt will require drastic public sector reform. To implement drastic reforms, Koizumi needs to gain public support. |
In the near term the economic outlook is still quiet bleak. |
It would be quite market-moving if the second-quarter GDP data comes in above consensus, |
It would be quite market-moving if the second-quarter GDP data comes in above consensus. |
It's a very gloomy picture. We can reasonably expect a very weak economic picture for the first and second quarter. |
Japanese institutional investors seem to have sought returns by selling dollar-denominated assets. That kind of repatriation is generally yen positive. |
might need some more time. |
Mr. Koizumi remains willing to pursue structural reforms, so long as the economy permits. He's not going to abandon reforms. However, realistically it's also difficult to assume very quick progress. |