Bank of Japan Minutes & Gov.Kudora Only Attraction As The Holiday Begins

As traders head home for the holidays markets remain very light. There was some activity in Asia after minutes and comments from the Bank of Japan otherwise the calendar was bear. Many global markets will close early or are closed entirely. German has already started its holiday and the US closes early but many traders have moved to safety and will be on vacation already.

Bank of Japan Governor Haruhiko Kuroda said on Thursday the central bank remains unwavering in its determination to do whatever it takes to overcome deflation and achieve its 2 percent inflation target.

“More than two years have passed since the BOJ introduced quantitative and qualitative easing (QQE). At the outset, many people were skeptical about the prospect of Japan’s economy overcoming deflation,” Kuroda said. “Some people may still be skeptical. But…economic and price trends have clearly changed under QQE. This is an indisputable fact,” he said in a speech at an annual meeting of Keidanren, Japan’s biggest business lobby.

Bank of Japan members were annoyed over the slow wage and capital expenditure growth but were optimistic that companies will start to boost spending once emerging economies improved, minutes of the BOJ’s November rate review showed on Thursday.

The Japanese yen which benefits from holiday safe haven trading is up 20 points against the greenback at 120.72 and against the euro at 131.94.

The Aussie and the kiwi both gained in the morning session helped by a surge in oil prices which seems to be leading to a return to commodity and commodity linked currencies. The Aussie added 12 points to 0.7246 and the kiwi to 0.6798. Traders in Australia are on holiday through Tuesday next week.

The euro fell versus the US dollar for the first time in four days Wednesday but regained most of the declines in quiet trading on Thursday. The euro is currently holding at 1.0927 leaving the shared currency on course for a second year of losses, as diverging policies at the two economies’ central banks drive foreign-exchange markets.

The 19-nation currency weakened against most of its 16 major peers as trading ebbed before the Christmas and year-end holidays.

The Federal Open Market Committee raised interest rates in December while the European Central Bank said its asset-purchase program would run until at least March 2017. The diverging trajectories was on display Wednesday as data showed an increase in US consumer purchases in November, accompanied by rising wages.

The biggest loser of the holiday week is the pound sterling which will go into the long holiday week at 1.487 level gaining 24 points in the Asian session as traders bought up the cheap commodity. An unfortunately run of lackluster data has weighed heavily on the currency crosses. The possibility of a Bank of England rate hike and its impact on the pound is closely watched. Expectations were previously that the U.K. would follow suit and raise rates like the U.S. within six months, however, significant failures of wage growth, GDP and also inflation mean that this is increasingly unlikely.