The Japanese yen has inched lower in the Monday session. In North American trade, USD/JPY is trading at 112.74. On the release front, Japanese Consumer Confidence increased to 44.9, edging above the estimate of 44.8 points. Although the Japanese consumer remains pessimistic, this marked the strongest reading since September 2013. In the US, Factory Orders declined 0.1%, the first decline since July. Still, this beat the forecast of -0.3%. On Tuesday, the BoJ releases Core CPI, which is expected to remain unchanged at 0.5%. The US publishes ISM Non-Manufacturing PMI, with the markets expecting the indicator to slow to 59.2 points.
President Trump has been pressing for a major legislative win before the end of the year, and it looks like he’ll get tax reform all wrapped up in time for Christmas. The Republicans have pushed through tax legislation through the House and the Senate at breakneck speed. After a false start on Friday, the US Senate passed a tax reform bill on the weekend. The 51-49 vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. Republican lawmakers hope to have Trump sign a bill before the end of the year. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.
Bank of Japan Governor Haruhiko Kuroda spoke at the Europlace financial forum in Tokyo on Monday, but there was nothing new in his message about where the BoJ is headed. Kuroda reiterated that the Bank would maintain its ultra-accommodative monetary policy in order "to achieve the 2 percent inflation target as soon as possible". The BoJ has been forced to constantly lower its inflation projections, yet the Bank has stubbornly stuck to the 2 percent target. Although the labor market remains tight, this has not translated into higher wages for workers, and nervous consumers have held tight to their purse strings, further contributing to a lack of inflation. Kuroda noted that global economic growth had improved, although he sounded a note of concern about President’s Trump isolationist policy, saying that he hoped that global trade would be conducted under the multilateral trading system.
