Releases from Japan:
                                            Forecast    Actual
March Domestic CGPI    (MoM)   +0.3%    +0.5%
March Domestic CGPI     (YoY)   +3.5%    +3.9%

I have been warning recently that prices here in Japan are definitely taking a giant leap higher – in comparison to the past 20 years anyway. Companies are grouping up to announce price increases – a swathe passed them on in March and second batch went through on April 1st.

The impact on March’s domestic CGPI was to take another jump higher to +3.9% which is the fastest pace in 27 years since February 1981.

Energy and commodity prices are of course provide the lion’s share of the rise and we are likely to see a similar jump in April’s numbers when they are released. Over the past year the import price index has risen by 21.6%. Prices of petroleum and coal products surged 29.7% YoY.

Again as I have repeated before, the big difference between the recession caused by the 1980’s bubble and the approaching globalization bubble inspired recession is that this one will not see deflation. Exactly the opposite…

Stagflation? Who mentioned stagflation?

The following economic releases are due today:

March
German WPI                     (MoM)    +0.5%
German WPI                      (YoY)    +6.0%
U.S. Import Price Index      (MoM)    +1.9%
U.S. Import Price Index       (YoY)    13.6%

April
University of Michigan Confidence        69.0

Phew… skittish was the right word. We did indeed see a break above 1.5901 and while I was rather skeptical of how far this could rally I didn’t really expect this only to be a new high of another 11 points. With this the Swissie failed to even reach the 0.9870 corrective low and the Pound stalled at what appears to be a rather strange level at 1.9842 which represented a 50% retracement of the move down from 2.0047.

Was this the final Dollar low? I don’t think so. I can’t totally rule it out with what could well end up as a double top. (This would require a clean break of 1.5340 to confirm.) However, the pullback has been fairly limited so far and there are no other indications except for the fact this new high in the Euro has caused a bearish divergence in the daily chart. But divergences require confirmation and this is still some way away.

So until that time we still have to be aware of what is probably still a greater risk of Dollar losses.

More likely today, the fact that we saw such a sharp reaction once the Euro reached 1.5912 does suggest that we are more likely to see the week close within tight ranges. We can’t ignore the fact that G7 are meeting today and this adds to the chance that we’ll not see the market attempt to push too strongly – having been “punished” last night.

Of course, if G7 comes up with stunning statement the whole paradigm could change but chances of that occurring seem small…

Note important support and resistance areas:

         USDJPY        EURUSD       USDCHF       GBPUSD
Res:  102.93-25    1.5860-12    1.0171-17    1.9842-48
Res:  102.24-45    1.5796-11    1.0125-51    1.9760-90

Spt:   101.33-58    1.5693-24    1.0030-40    1.9694-04
Spt:   100.72-03    1.5605-23    0.9933-62    1.9605-46

See Also

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