The pair is likely to trade with a firm undertone today in Asia thanks to improved confidence in the U.S. economy and lingering speculation that the Fed may explore the exit from the current easing policy at an earlier than expected timing. The Standard & Poor’s 500 Index closed Friday at 1,466.47, the best level since 2007, while yields on Treasury’s 10-year notes reached 1.97%, the highest since April 2012, after data showed improvement both in the ISM manufacturing and ISM non-manufacturing indexes. Investors will also watch closely developments political developments in Japan, as the Abe-led government is widely expected to decide on supplementary budget, worth more than Y10 trillion, as early as this week. Meantime, the BOJ, which is under strong political pressure for more pro-active monetary action, will hold next policy board meeting on Jan. 21 and 22. On Friday, the rate moved from Y87.23 to Y88.41, the highest since July 2010.
EasyForexNews Research Team