The Japanese yen has edged lower in the Tuesday session. In North American trade, USD/JPY is trading at 112.69, up 0.25% on the day. On the release front, BoJ Core CPI remained unchanged at 0.5%, matching the estimate. US ISM Non-Manufacturing PMI slowed to 57.4, missing the estimate of 59.2 points. On Wednesday, the US releases ADP Nonfarm Employment Change, the kickoff to several key employment indicators late in the week.
Another speech, same message. Bank of Japan Governor Haruhiko Kuroda spoke on Monday, and 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.
Tax reform legislation is picking up steam, as both houses of Congress have now passed tax bills. The Senate passed a tax reform bill on the weekend, but the vote was a razor thin 51-49. The vote went along party lines, with one Republican voting against the bill. Now that that the House and the Senate have passed tax bills, a conference committee will try and hammer out a uniform bill which can be sent to President Trump and signed into law. There are some differences in the two bills, notably individual tax rates, the alternative minimum tax, mortgage interest deductions and the estate tax. The Senate and House of Representatives will have to work out their differences quickly, as the new "merged" bill will have to pass through in both houses. If the bill does become law, it will mark the first major tax reform in the US in 30 years, and could boost the US dollar against the yen and other major currencies.
