-->Good Morning. Dollar-yen extended its overnight losses, slipping toward the 120 level to a low of 120.02, only to be quickly bought up by onshore investors to settle at around 120.20 by mid-day. Although Japan’s finance minister Omi indicated it is inappropriate for him to comment on the level of the FX rate, his comments that the weekend G7 meeting is likely to see “a variety of issues" being discussed played up market expectations that the topic of the weak yen will be addressed. This also lent some support for the yen. Trading in the Euro-dollar was slightly muted as markets await guidance from the slew of Fed speeches due later. Among them, the key focus should be on Fed Bernanke’s speech as well as US Treasury Secretary Paulson’s testimony before a House Ways and Means committee hearing on the President’s FY08 budget. Sterling-dollar inched higher as British retail sales growth accelerated to 5.2%yoy in January.
The Antipodean currencies traded marginally softer vs. the dollar, but the Aussie held on better, supported in part by the positive data that showed Australian business conditions improved in Q4 and news of a new A$438mn uridashi bond issuance. The RBA holds its monthly policy meeting today, and it is widely expected that the central bank will stand pat in its interest rate announcement due tomorrow.
Following the weaker dollar-yen, dollar-Asia was generally well offered amidst concerns of Asian central banks’ bids on the downside. The Philippines peso rallied vs. the dollar, ignoring lower than expected January CPI inflation of 3.9%yoy. Dollar-ringgit broke below 3.50 to settle at a record low of 3.4965 as BNM governor Zeti reiterated that the ringgit strength has not hurt exports and FX trading remains orderly. Dollar-rupiah touched 9049 ahead of Bank Indonesia’s MPC meeting later, where a 25bp cut is widely expected. The only exception was the TWD, which fell in reaction to selling interests by insurers and pension fund investors