Euro: Another Issue Avoided as ISDA Rules No Greek Default

 | Mar 02, 2012 04:19AM ET

Dollar Takes Advantage of Euro Selling, Generates Little heat Itself

4Q GDP reading is scheduled for release at 13:30 GMT. Considering we have monthly growth figures, expected surprise quotient is low. But we have good conditions for surprise.

Japanese Yen Slides on Risk, Policy Officials Try to Leverage the Trend

Japanese officials have no doubt felt a significant sense of relief these past weeks as their currency has dropped 7.4 percent against the benchmark dollar and 13.2 percent versus the euro. And, though we are still a very long way from peaks of 125 and 170 (respectively) set not so long ago; the first steps in a larger, fundamental reversal seem to be in place. It should be asked, however, whether this is a move that is based more heavily on underlying financial imbalances or the persistent efforts of monetary policy officials. Finance Minister Azumi and BoJ Governor Shirakawa perhaps believe it is their doing. This morning Azumi stated that Japan was considering further investment into EFSF bonds (a EURJPY booster), while Shirakawa said he would pursue easing until the central bank’s price target was in sight. That said, market forces historically win out over manipulation. The fundamentals are there for depreciation, but watch out for waves of carry unwinding.

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