Japanese Yen Improved, Bank of Japan’s Decision

Market Reviews

The Yen has risen. Bank of Japan didn’t change its policy, maintaining short term interest rate at -0.1% and the target for 10 year government bonds at 0%. Nonetheless, the bank reduced its inflation projections. For 2017, it predicts inflation to be at 0.8% (from 1.1%), for 2018 at 1.4% (from 1.5%), for 2019 inflation is expected to point at 1.8%. As of Gross Domestic Product, it’s projected to be at 1.9% in 2017, 1.4% in 2018 and 0.7% in 2019. Pound is sustained, waiting for this week’s Bank of England meeting. Australian and New Zealand dollars are weak, along with the single currency and Swiss Franc.

Donald Trump is going to appoint Jerome Powell (Fed Governor) as the next Fed chair. The majority sees him as a qualified person for this job, which might be more decisive than Jannet Yellen in terms of policy tightening. Concerning the tax bill, some speculate that the corporate tax lowering will be split on stages. Investors wouldn’t be happy with such an option. Another disturbing news is that Paul Manafort (former Trump campaign manager) and two other politicians took money from Ukrainian political leaders and parties and then laundered them in the US.

Japan household spending reduced -0.3% yoy in the prior month. Industrial production fell -1.1% mom. Housing starts were down -2.9% yoy. China manufacturing PMI decreased from 52.4 to 51.6 this month. Non-manufacturing PMI fell from 55.4 to 54.3. New Zealand building permits declined -2.3% mom last month. British Gfk consumer confidence hit -10. Today, the Eurozone will publish Gross Domestic Product of the third quarter, Consumer Price Indexes and unemployment rate. Canada will announce Gross Domestic Product, IPPI and RPMI. US will feature employment cost index, S&P Case-Shiller house price, Chicago PMI and Conference Board consumer confidence.