Yen Still The Focus
USDJPY continued its upward march overnight trading through 89.00 for the first time since July 2010. Japan’s trade balance for November chalked up yet another deficit, and now the current account (unadjusted) has slipped below the line too. Both deficits were wider than expected triggering a brief additional round of yen selling. The new policy approach of the Abe-administration remains the key driver however. A front page article in the Nikkei newspaper announced that the BoJ’s adoption of a 2% inflation target on Jan 22nd is effectively a done deal. This allowed USDJPY to ignore the first indirect criticism of Japan’s new currency policy. Bloomberg reported that St. Louis Fed President Bullard said he was ‘a little disturbed’ by Japan’s apparently new and more explicit exchange rate policy. Today’s calendar is light – with attention likely to focus o n UK industrial production.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank