Tokyo investors to watch US jobs data, G20

08 Nov, 2010

Tokyo traders will be looking to US jobs data due Friday for clues on the state of the world's biggest economy while attention will also be on the Group of 20 summit at the end of the week, analysts said. The US job numbers are widely expected to show weaker growth in private payrolls and an unemployment rate stuck at a painful 9.6 percent for a third month.
The G20 summit in South Korea is expected to discuss growing concerns over attempts by some countries to weaken their currencies in order to stimulate exports.
"It's hard to predict share prices next week, as dealers are watching to what extent the currency issue will be discussed in the G20 summit, in addition to the US jobs data," said Seiichi Suzuki, market analyst at Tokai Tokyo Securities.
"Both the US Fed and the Bank of Japan are trying to boost (their) economies forcibly by monetary easing, but there is a question over how long those kinds of policies will last," said Suzuki. Suzuki said the Fed's decision Wednesday to pump 600 billion dollars into the economy could dilute the dollar's value, helping US exporters, but at the same time it "could cool down economies of emerging countries."
The United States has been pushing for China to let its yuan appreciate, accusing Beijing of keeping its currency artificially low to help its exports, at the expense of US manufacturers.
China in turn accuses the United States of an irresponsibly loose monetary policy that has led to a deluge of speculative cash in emerging markets. Tokyo also faces criticism from emerging countries for its intervention in the currency market to depreciate the yen as it tries to kick-start its sluggish economy.
In the week to November 5, the headline Nikkei index of the Tokyo Stock Exchange gained 423.54 points, or 4.60 percent, to 9,625.99. The Topix index of all first section shares advanced 24.07 points, or 2.97 percent, to 834.98.
The dollar was trading below 81 yen Friday, approaching its post-war low of 79.75 yen touched in 1995. Hiroichi Nishi, Nikko Cordial broker, said investors would "move to lock in profits if the (US) jobs data turn out to be bad" but otherwise the Nikkei would likely rise further.
"There is excessive liquidity resulting from the additional monetary easing by the United States and other countries' policies. The surplus money is now flowing into risk assets," he said. Nishi forecast the Nikkei's bottom at 9,400 and the upside close to 10,000, while Suzuki expects the index will move in a range between 9,100 and 9,900.

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