The markets have already priced in at least one rate hike and are beginning to price in the second rate hike by year-end. Combined with the steady recovery of the Japanese economy, those expectations are likely to push up the yen.
Good economic figures will surely be euro supportive. The euro-zone economy is expanding faster than expected.
In the near term the economic outlook is still quiet bleak.
It's a very gloomy picture. We can reasonably expect a very weak economic picture for the first and second quarter.
Some market participants are beginning to be concerned about the risks of an earlier rate hike.
Expectations of further Fed rate increases haven't peaked yet, while rate hikes by the Bank of Japan are a long way off. Along with Japanese investors continuing enthusiasm for overseas assets, that will likely push up the dollar in coming weeks.
Pressure on China to revalue against the dollar leads other Asian currencies, including the Japanese yen, to strengthen against the U.S. currency.
It would be quite market-moving if the second-quarter GDP data comes in above consensus.
Japanese institutional investors seem to have sought returns by selling dollar-denominated assets. That kind of repatriation is generally yen positive.
In general reducing the public debt will require drastic public sector reform. To implement drastic reforms, Koizumi needs to gain public support.
