Article Highlights

  • Nothing new from the RBA’s meeting minutes
  • BOJ leaves policies unchanged
  • Japan’s Cabinet Office upgrades GDP outlook
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Ho-hum. Major currencies were locked in tight ranges despite the release of the BOJ’s December policies and the RBA’s meeting minutes. What did the central banks have to say?

Major Events:

BOJ policy decision – In a 7-2 vote, Bank of Japan (BOJ) members have decided to keep their policies unchanged for another month. That means short-term interest rates is unchanged at -0.1%, the 10-year JGB target will remain at around 0.0%, and the bank will still purchase assets to the tune of 80 trillion JPY per year.

Kuroda and his gang are pretty happy with the economy, saying that it has continued its “moderate recovery trend.” They praised the resilience of private consumption, and lauded the moderate uptrends of fixed business investment and sentiment. It’s expecting exports to pick up in tandem with economic improvements of Japan’s trading partners though inflation is expected to turn 0% or negative as it reflects weak energy prices.

In a separate release, Japan’s Cabinet Office printed revisions to its economic outlook. Real GDP is expected to grow by 1.3% in 2016 (up from 0.9%) and 1.5% in 2017 (up from 1.2%). Nominal GDP growth is expected to rise by 1.5% in 2016 (up from 2.2%) and 2.5% in 2017 (up from 2.2%). Last but not the least, CPI is seen at 0.0% (down from 0.4%) in 2016 and 1.1% in 2017.

RBA meeting minutes – The Reserve Bank of Australia (RBA) also made some waves today when it printed the minutes from its meeting from earlier this month. Remember that in its official statement, the RBA noted that the economy will see some slowdown near the end of the year before picking up again.

Well, Philip Lowe and his team didn’t have much to add today. They recognized that employment conditions could be better, as most of the gains in employment are part-time jobs while wage growth remained low. GDP is also expected to decline in Q3 2016 as mining investment continues to contribute less to growth. Overall, the RBA felt pretty confident at holding its interest rates steady at 1.50%.

Major Market Movers:

JPY – The yen gave up some of its gains after the BOJ kept its interest rates and asset purchases steady for another month when a few analysts had expected some scaling back from the latter. If you recall, the low-yielding yen gained a pip or two following a terrorist attack in Berlin and the assassination of a Russian ambassador to Turkey.

USD/JPY ended the session near its 117.24 open price after dipping to a low of 116.99 while GBP/JPY gained 4 pips (+0.03%) to 145.44 and EUR/JPY inched 13 pips higher (+0.11%) to 122.10.

Watch Out For:

  • TBA: BOJ press conference
  • 8:00 am GMT: Switzerland’s trade balance (3.57B CHF expected, 2.68B CHF previous)
  • 8:00 am GMT: German PPI (0.1% expected, 0.7% previous)
  • 10:00 am GMT: Euro Zone current account (24.2B EUR expected, 25.3B EUR previous)

See also:

U.S. Session Recap
London Session Recap

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