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The Greenback finished another bloody trading session as traders continued to price in central banks normalizing their policies. Meanwhile, Kuroda’s not-so-dovish remarks boosted the yen higher.

  • New Zealand’s food price index slips by 0.8% vs. 0.4% reading in November
  • Australia’s MI inflation gauge rises by 0.1% vs. 0.2% growth in November
  • Kuroda’s speech fuels tightening speculations
  • Bundesbank to include Chinese yuan in its reserves

Major Events/Reports:

Kuroda’s not-so-dovish remarks

Yen traders started the week on strong footing after a speech by Bank of Japan (BOJ) Governor Kuroda failed to kill tightening speculations.

In a speech to BOJ’s regional branch managers, Kuroda lauded that “The economy is expected to continue expanding moderately.” What caught the investors’ attention, however, is Kuroda indicating that Japan’s core inflation is now “moving around 1%.”

See, this is a teeny tiny bit more optimistic than his remarks three months ago where he said that core prices were “around zero” and fueled speculations that monetary policy tightening is on the table this year.

Mixed market trading

With not a lot of top-tier data on the docket, equities and commodities mostly traded with mixed results.

  • Nikkei is up by 0.31% to 23,728.1;
  • Australia’s A SX 200 is down by 0.10% to 6,075.5;
  • Hang Seng is up by 0.57% to 31,591.0, and the
  • Shanghai index is down by 0.05% to 3,427.207.

Commodity prices traded a little bit better, however, thanks in part to overall dollar weakness.

  • Gold is up by 0.26% to $1340.94 per oz.;
  • Brent crude oil is up by 0.04% to $69.82, while
  • U.S. oil prices is flat at $64.37.

Major Market Mover(s):

USD

A lack of fresh catalysts and traders pricing in tighter policies from other central banks such as the PBoC, ECB, and BOJ kept the Greenback on the defensive for most of the session.

EUR/USD is up by another 5 pips (+0.04%) to 1.2200;
GBP/USD gained another 9 pips (+0.07%) to 1.3740;
USD/CHF dipped by 12 pips (-0.12%) to 0.9670.

Kuroda’s not-so-dovish speech kept the yen bulls alive and pushed the yen higher across the board.

JPY

USD/JPY is down by 33 pips (-0.30%) to 110.76;
GBP/JPY dipped by 37 (-0.24%) to 152.16;
EUR/JPY fell by 36 pips (-0.27%) to 135.11, and
CAD/JPY dropped by 19 pips (-0.21%) to 88.94.

Watch Out For:

  • 10:00 am GMT: Euro Zone’s trade balance (22.4B EUR expected, 19.0B EUR previous)