Yen Declines And Oil Drops Below $40 Despite Opec Cutting By 2.2mbd

Market Brief

The yen retreats this morning against the majors - USDJPY trading at 87.84 after a low of 87.20 - a level not seen since 1995. Analysts continue to mull over how and what the BoJ can deploy in terms monetary policy to calm the Yen's rise of late. The BoJ meets today for two days to discuss steps it can take - a further rate cut is definitely possible but economists remain skeptical on the impact such a cut would have. However, with the US and Switzerland lowering their rates drastically close to 0%, Japan is no longer the major economy with the lowest interest rates. The government also announced that it is considering expansion of public works projects, which could have a higher multiplier effect than the fixed-sum tax cuts previously announced as an economy booster.

The Dollar fought back in Asian trading - EURUSD trading to an intraday low of 1.4347 before gaining again as spill off from the largely better than expected Swiss retail sales - the Swissy gaining 150pips on the back of that news. German IFO number was lower than consensus and the lowest since 1982 - highlighting the seriousness of the current recession.

Crude slid below the $40, this despite OPEC announced a cut of 2.2mbd in it's output on weaker demand. This has a profound effect on industrial stocks in Asia - 'the world's workshop'. Stocks rose as excepted further cuts in interest rates and lower crude prices are positive signs for the difficult 2009 session ahead. These factors will prove crucial to stimulate the ailing manufacturing economies

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