Mark, Thanks for the great article...I went to the website and found some more pearls on the US$. This could be the start of a change in sentament on the US$. The technicals all point to a lower dollar and now with the trade gap difference...this could be the one that starts the snowball rolling.
Forex: Dollar falls on Japan trade surplus
BY TATSUYA INOUE
The dollar sank sharply against the yen Thursday, as bankers and hedgefunds sold the greenback after the release of data showing Japan's trade surplus grew sharply in April, traders said.
Following narrow movement early in the morning, the dollar started
falling after the Ministry of Finance released data showing that Japan's trade surplus in April doubled to 1.02 trillion yen. After lingering around 111.20 yen, the dollar fell further late in the session.
At 5 p.m., the dollar traded at 110.89-110.92 yen, down from 112.30-112.33 yen at 9 a.m. It was quoted at 1.7090-1.7095 German
marks, down from 1.7190-1.7193 marks at 9 a.m.
"U.S. government officials are paying close attention to Japan's increasing trade surplus. That sentiment triggered selling by life insurance firms and bankers, who hold significant long positions," said Taisui Tanaka, market strategist at Credit Suisse in Japan.
"The current sentiment is negative for the dollar. Many investors find it difficult to buy the dollar," Tanaka said.
Many analysts expect that the dollar is unlikely to trade below 110 yen for long even if the dollar sinks that far. "The yen's excessive
appreciation will cause Japan's interest rates to sink even further," one analyst said. "And the yen's further appreciation will damage exporters' profitability, raising concern about Japan's economic recovery."
The German mark traded at 64.73-64.80 yen at 5:19 p.m.
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