BEIJING (Reuters) – Japanese Finance Minister Yoshihiko Noda said on Saturday he was ready to employ "all possible measures" to tackle the soaring yen, which was having a big impact on the country's export-led economy.
Speaking in China's capital, Noda told reporters he wanted the Bank of Japan to guide policy while sharing its views on the economy with the government.
He also said there was room for Japan's central bank to improve the monetary situation, but it was up to the bank to consider specific policy steps.
The yen hit a 15-year high against the dollar this week, and Tokyo is scrambling to craft a package of steps to prop up its stuttering economy while keeping up pressure on the BOJ to do more to pull the country out of deflation.
The yen, which surged to 83.58 per dollar on Tuesday, was hovering just above 85 on Saturday.
"Many people are worried and the government is taking a serious view, and we must adopt all possible measures," Noda said, after meeting Chinese Finance Minister Xie Xuren on the sidelines of a Japan-China economic dialogue.
Noda urged China to make its yuan currency more flexible and said Japan would announce its basic policy on an economic package next week.
"We will take decisive measures when necessary while watching market trends with great interest," Noda said, echoing comments the previous day from Prime Minister Naoto Kan that signaled possible currency intervention.
Noda also said he expected Kan to meet BOJ Governor Masaaki Shirakawa as soon as possible after the central bank chief returns from the United States on Monday.
The BOJ may hold an emergency meeting early next week to ease monetary policy, a source familiar with the matter said [ID:nSGE67Q0J1]
China, meanwhile, should continue making "steady efforts" to make its currency more flexible, Noda told reporters. The yuan has appreciated about 0.4 percent against the dollar since it was lifted from a nearly two-year peg on June 19.
Japan has not intervened in the currency market since March 2004, when a 15-month yen-selling spree came to an end. During that period, they sold 35 trillion yen ($410 billion), the equivalent of more than one-third of the annual budget.
Despite the risk of possible action by Japanese authorities to curb yen strength, such as currency intervention or monetary easing, some traders and investors say the yen could still test a record high of 79.75 yen to the dollar, hit in April 1995.
(Reporting by Tetsushi Kajimoto; Editing by Nick Macfie, Ken Wills, John Stonestreet)
NEW YORK (Reuters) – Beaten-up investors go into September, historically a weak month for stocks, facing key reports on jobs, manufacturing and services. If those disappoint, the S&P 500 could breach technical support levels, pushing stocks yet lower.
The S&P 500 index has fallen nearly 13 percent since April as investors fret about the chance of a double-dip recession. But the index has found solid support around the 1,040 level, with a sustained move below that proving tough.
Federal Reserve Chairman Ben Bernanke boosted stocks on Friday by signaling the Fed is ready to act if the economy worsens. But more weakness in upcoming indicators like non-farm payrolls and Institute for Supply Management surveys would intensify fears the economy is sliding back into recession.
"There is this continual trend toward numbers falling short of expectations," said Nick Kalivas, equity analyst at MF Global in Chicago. "My guess is you'll see some selling come in again next week on these numbers."
The non-farm payroll report on Friday is expected to show 99,000 jobs were lost in August, swollen by redundancies among temporary census workers, while private sector hires grew by only 42,000.
Both the manufacturing and services sectors are expected to have experienced another slowdown in growth in August. The ISM manufacturing report is released on Wednesday, followed by the services sector report on Friday.
The S&P 500 tested the 1,040 level twice during the week, both times ending the day with gains. The level has consistently attracted buyers over the past 10 months and was significantly breached only once during a brief stint in July.
"Here we are sitting at this important support level, having pulled back 8 percent (on an intraday basis) in three weeks, you potentially set up for a reversal," said Richard Ross, global technical strategist at Auerbach Grayson in New York.
The benchmark Standard & Poor's 500 index finished this week at 1,064 on Friday. If the 1,040 level is breached, the S&P 500 could fall into a lower range around 1,020 to 1,010. However, the index runs into resistance at its 14-day moving average at 1,076.65, providing only limited scope on the upside.
Investor sentiment remains negative. In the options market, investors bought S&P 500 puts, giving them the right to sell S&P futures at a fixed price, although the most actively traded option on the S&P 500 (SPY.P) ETF was the $107 call, suggesting some bullish trades ahead of next week.
"Overall investor sentiment in the option market has become very skeptical, with put buying widely exceeding call purchases," said Ryan Detrick, technical senior analyst at Schaeffer's Investment Research in Cincinnati.
The put-to-call ratio, a measure of investor sentiment, was at 0.61 as of Thursday's close compared to a 21-day ratio of 0.59.
Investors will be closely following comments from executives at big industrial companies like General Electric (GE.N) and Boeing (BA.N) at Morgan Stanley's Global Industrials Unplugged Conference next week.
MAJOR REVENUE ESTIMATES
Intel Corp (INTC.O) cut its third-quarter revenue estimates in a surprise on Friday. Although investors shook off the news after an initial fall, bleak outlooks from large corporation at the heart of the economy could rattle investors.
As usual there will be a series of secondary labor market data playing second fiddle ahead of the Friday's jobs number. ADP's jobs report on Wednesday is expected to show the private sector added 18,000 jobs in August, down from 42,000 in July.
Weekly claims for jobless benefits are tipped to remain solidly elevated on Thursday, edging up to 475,000 compared to 473,000 the week before.
With significant risks on the horizon, many investors may think twice about getting into the market at the start of September, historically the worst performing month for all three major indexes.
That may be especially true given the three day break the following week when U.S. markets shut to observe Labor Day on Monday, September 6.
Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis, said he found it hard to envision a rally in the current environment.
"Right now the market is locked into short-term thinking," he said.
(Reporting by Edward Krudy; Additional reporting by Rodrigo Campos and Leah Schnurr; Editing by Kenneth Barry)
BEIJING – The economies of China and Japan are interdependent and their close cooperation has helped two-way trade rebound above the levels before the world financial crisis, a top Chinese economic official said Saturday.
Vice Premier Wang Qishan made the remarks to delegates from the two countries — the world's second and third largest economies — who were meeting in Beijing to discuss ways to recover from the crisis and foster regional cooperation.
"The economies of both countries highly rely on each other. Economic and trade cooperation have been improved in a firm manner. Bilateral trade has recovered rapidly and has exceeded levels from before the financial crisis," Wang said in opening the annual China-Japan economic dialogue.
He noted that China has "huge market potential" and that Beijing would strive to create a good environment for foreign investment.
Japanese officials said before the talks that they would push China to ease export controls on rare metals that are used in hybrid electric cars and other high-tech products.
The meeting comes after government statistics released earlier this month showed that China had surpassed Japan as the world's second-biggest economy after three decades of blistering growth that puts overtaking the U.S. in reach within 10 years.
Japan is still far richer per person, and the news is more proof of the arrival of China, with 10 times Japan's population, as a force that is altering the global balance of commercial, political and military power.
The two sides were also expected to discuss North Korea and its nuclear program. North Korea walked away from nuclear disarmament negotiations last year to protest international criticism of a long-range rocket launch.
The China-Japan talks are being chaired by Wang and Japanese Foreign Minister Katsuya Okada. The Japanese side also includes the country's finance, trade and environment ministers, while the Chinese delegation includes Foreign Minister Yang Jiechi and its finance and commerce ministers.
It is the third economic dialogue the two sides have held, following talks in June last year in Tokyo and a first round in December 2007 in Beijing.