Global Capital Daily

GLOBAL CAPITAL DAILY MARKET COMMENTARY

Contributed by Blair Baker
Foreign Exchange Analyst and Strategist
Global Capital Investment, LLC

24 JANUARY 2002
Thursday

North American Comment at 15.00 GMT

Bid Prices


USJY         134.34
EUUS         0.8770
EUJY         117.83
BPUS         1.4222
USSF         1.6755
ADUS         0.5175
NZUS         0.4251
USCD         1.6000

Support and Resistance

Support     Resistance         Support     Resistance

USJY                                   EUUS
L1. 130.85 134.75                 0.8750 0.9000
L2. 125.50 136.00                 0.8700 0.9085
L3. 122.85 138.00                  0.8625 0.9200

EUJY                                    BPUS
L1. 115.50 119.25                 1.4200 1.4560
L2. 113.60 120.00                 1.4100 1.4685
L3. 112.00 121.00                 1.4000 1.4845
USSF                                   ADUS
L1. 1.6350 1.6780                 0.5115 0.5275
L2. 1.6250 1.6850                 0.5045 0.5325
L3. 1.6100 1.7000                 0.5000 0.5395

NZUS                                   USCD
L1. 0.4145 0.4360                 1.5865 1.6190
L2. 0.4050 0.4450                 1.5775 1.6260
L3. 0.3970 0.4550                 1.5700 1.6325

JAPANESE YEN (�)

The yen appreciated vis-�-vis the dollar during European dealing but the greenback retraced its early losses and tested offers around the �134.75 level. The �135.00 figure continues to be cited as a major options barrier hence selling interest could cap the greenback�s upside for the remainder of the day. Stops were hit below the �134.40/ 20 levels during the pair�s brief downturn. FM Shiokawa said Japan�s exchange rate policy remains unchanged while PM Koizumi said he is eyeing the weaker yen. Takenaka said the economy is not in a crisis but cited continued downside risks. Former MoF official Utsumi said the markets misinterpreted O�Neill�s and Shiokawa�s comments this week and that the MoF is not necessarily endorsing a weaker yen. The government and BoJ will release a joint report tomorrow via the CEFP to identify ways to tackle deflation � the first real sign of cooperation on this issue. LDP policy chief Aso said the recent declines in the yen and the Nikkei 225 are a great concern. The Nikkei 225 stock index gained +0.33% to close at �10,074.05. Today�s data saw Japan�s trade surplus slump 18.4% y/y in December as the 2001 trade surplus dropped 33.8%, the largest fall since 1970. Repatriation data released today saw a total net inflow of investment capital into Japan of �425.9 billion in the week ending 18 January. Dealers cite talk of a �135.65 option barrier maturing on 6 February. CPI data will be released overnight and will evidence continuing deflationary pressures.

EURO (E)

The euro was confined to fairly narrow range vis-�-vis the dollar today as the pair remained in a holding pattern above the $0.8750 level before Fed Chairman Greenspan�s Senate testimony. In contrast to his pessimistic statements of 11 January, Greenspan carefully managed the markets� expectations today saying "some of the forces that have been restraining the economy over the past year are starting to diminish." He added economic activity is "beginning to firm" and even amplified his remarks about mortgage refinancings. On 11 January, he said higher mortgage rates were "likely to dampen housing activity and equity extraction" but he today said mortgage rates should provide support. March Eurodollar contracts are currently discounting an 80% chance that the federal funds target rate will remain unchanged at 1.75% next week when the FOMC meets. Greenspan deferred to TS O�Neill when asked about the dollar. The ECB released its January monthly report today and it mirrored President Duisenberg�s comments yesterday. It read "the recent buildup of liquidity, if not reversed, will call for a thorough analysis of monetary developments in the coming months, in particular when the euro area economy recovers." This is a sign the ECB is becoming more concerned with the increase in the M3 money supply. The ECB reiterated that "financing conditions in the euro area are favourable at present" and added "the decline in consumer price inflation will continue in the course of 2002." Regarding the ongoing fiscal problems of some EMU-12 countries, it said there is "no time for fiscal activism" by countries that have not "attained budgetary positions close to balance or in surplus." Today�s data saw Italian business confidence increase to 88 from 83 in November. The German Bank Association predicted German economic growth will lack the EMU-12�s rate of growth this year and estimated Germany�s economy contracted 0.5% in Q4. French European Commissioner Lamy today said the ECB should adopt a "symmetric" approach to inflation not unlike that of the BoE. French FM Fabius predicted France will realize positive growth in 2002. Dealers cite talk of Eurosystem national bank bids ahead of the $0.8750 level. Euro bids are cited around the $0.8725 level. The euro fell to the �117.60 level today but retracted its losses and move above the �118.00 figure during North American dealing. Euro selling pressure is cited around the �118.35 level

BRITISH POUND (�)

The British pound extended its recent slide vis-�-vis the dollar today as sterling tested bids around the $1.4200 figure. Demand for Swiss francs and yen overnight drove the pair lower as bids around the $1.4220 level were absorbed. The BCC released its quarterly services survey today and it evidenced a decline in export sales by service firms to �7% in Q4. The BCC urged the BoE to keep rates unchanged on account of robust final private demand which it fears could become overheated even further. Q4 GDP data will be released tomorrow and could evidence larger-than-expected sectoral contractions. The euro weakened vis-�-vis the pound today as the single currency fell to the �0.6150 level before euro demand emerged. Stops are cited below the �0.6145 level.

SWISS FRANC (Sfr)

The Swiss franc extended its recent slide vis-�-vis the dollar today as the greenback tested offers around the SFr 1.6780 level. Stops were hit above the SFr 1.6725 level during European dealing as traders cited talk of SNB intervention. It was reported that the SNB was seen buying euros for francs in Paris though this remains unconfirmed. The franc also weakened today on account of sterling demand for francs. SNB added tomorrow/ next and one-week liquidity at 1.50% today. LIBOR was fixed at 1.72333% yesterday. The franc depreciated vis-�-vis the euro today as the single currency moved above the SFr 1.4700 figure. Stops were hit above the SFr 1.4710 level.

SCHEDULE OF EVENTS-Thursday January 24, 2001
(All Times GMT)

THURSDAY, 24 JANUARY 2002

0030     UK          January RICS housing survey
0500     Japan      December chain store sales
0500     Japan      December department store sales
0900     Germany ECB monthly bulletin
1100     UK          BCC quarterly economic survey
1330     US         Weekly jobless claims
1330     Canada November employment insurance
1400     US         CEA�s Hubbard meets with House Policy Committee
1500     US         Fed Chairman Greenspan testifies
1900     Spain    ECB�s Domingo Solans speaks
2000     US         Fed Chairman Greenspan speaks
2300     Japan     January Tokyo consumer price index
2300    Japan     December nationwide CPI

FRIDAY, 25 JANUARY 2002

0930     UK          Q4 GDP
1500     Germany Buba�s Welteke speaks
1500     US          December existing home sales
1830     Spain       ECB�s Domingo Solans speaks

About Global Capital Investment LLC

Global Capital Investment, LLC is a leading provider of professionally- managed foreign exchange investment services and offers a comprehensive online foreign exchange trading/ dealing platform for individual and institutional clients.

Blair Baker, the writer of this column, is Global Capital Investment's Foreign Exchange Analyst and Strategist. Blair may be contacted at blairbaker@globalcap.com .

DISCLAIMER

DISCLAIMER: Global Capital Investment’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Global Capital Investment assumes no responsibility or liability from gains or losses incurred by the information herein contained.