August 31st - A slew of disappointing numbers out of Japan overnight has added further pressure to the Yen against a number of currencies, testing 6 week lows over the dollar and continuing to chart new lows against the Euro. A sharper than expected drop in housing starts for July and downbeat industrial output figures have underlined the message that further rate hikes from the Bank of Japan will likely be few and far between, whilst other currencies – especially the Euro – are poised to see yields improve further over the coming months. This certainly seems to be something of a step change from the rather more bullish mood we saw at the BoJ earlier in the year but simply put right now the Yen will likely remain under pressure until we see some more robust economic data emerging. Obviously the ECB rate verdict will be closely watched later in the session – there seem to be few expecting to see another quarter point added today - although a strong suggestion from President Trichet that at least one additional hike will be forthcoming before the end of the year would cause little surprise.
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