Dollar stays soft in early US session but selling momentum is limited so far. Indeed, the greenback has pared back some losses against Yen, which is the relatively stronger one. Released from US, trade deficit widened to USD -65.3b in November, larger than expectation of USD -61.5b. Exports rose 1.0% to USD 121.7b while imports rose 1.2% to USD 187.0b. Initial jobless claims dropped 10k to 265k in the week ended December 24, below expectation of 277k. Continuing claims rose 63k to 2.1m in the week ended December 17.

Eurozone M3 money supply grew 4.8% yoy in November, much higher than expectation of 4.4% yoy. Meanwhile, leading to non-financial corporations rose 2.2% yoy, highest since mid-2009. Lending to households also grew 1.9%, highest since mid-2011. Staying in Eurozone, Italy finance minister Pier Carlo Padoan criticized ECB for not giving any detail sin the decision to request the troubled Banca Monte Dei Paschi Di Siena SpA to boost the balance sheet by EUR 8.8b. And he also said that ECB's demand didn't take into consideration of the decree passed by the Italian cabinet for its "capability and relevance".

BoJ governor Haruhiko Kuroda said today that "both the global and Japan's economies are moving in a positive and more desirable direction." In particular, "Japan's exports and production are picking up, and private consumption is showing signs of strengthening". And, " the excessive strength in the yen is being corrected". Though, he also emphasized that "uncertainties remain over what policies Trump will actually pursue, how Europe's political landscape could change given a number of upcoming elections there, or whether emerging economies and resource-based countries can continue accelerating their growth."

USD/JPY Daily Outlook

Daily Pivots: (S1) 116.92; (P) 117.37; (R1) 117.69; More...

USD/JPY's consolidation from 118.65 is still in progress and intraday bias stays neutral. In case of deeper fall, downside of retreat should be contained by 114.76 minor support and bring another rise. Above 118.65 will extend the current rally from 98.97 to test 125.854 high. We'd be cautious on topping at 125.85 on first attempt.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the corrective is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance.

Economic Indicators Update

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US equities closed lower overnight as DJIA suffered the second triple digit loss since presidential election. DJIA closed down -111.36 pts, or -0.56%, at 19833.68. S&P 500 lost -18.96 pts, or -0.84%, to close at 2249.92. NASDAQ also dropped -48.88 pts, or -0.89%, to close at 5438.56. While a day of decline in thin holiday trading is not enough to warrant reversal in trend, the synchronous move with other markets suggest that the markets overall is turning into a consolidation phase. To be more specific, 10 year yield closed down -0.057 to 2.506. 30 year yield also lost -0.055 to close at 3.084. Dollar index is back at 102.90 after edging higher to 103.63. Gold breaches 1150 again, comparing to recent low at 1124.3. We'd probably see more consolidative trading ahead, at least before US non-farm payroll to be released on January 6.

10 year yield's sharp fall now raises the chance of short term topping at 2.621, on bearish divergence condition in daily MACD. Focus is back on 2.424 near term support. As long as 2.424 holds, price actions from 2.621 are viewed as a brief consolidation and recent up trend should resume soon. Break of 2.621 will extend recent rise to next key resistance level at 3.036. However, break of 2.424 will confirm topping and bring pull back to 55 day EMA, now at 2.221, or even further to 38% retracement from 1.336 to 2.621 at 2.130.

S&P 500 could have also topped at 2277.53 after hitting medium term channel resistance. Focus in back on 2248.44 near term support level. Sustained break there would at least bring pull back to 55 day EMA (now at 2205.57) or even further lower to channel support. Nonetheless, firm break of 2277.53 will accelerate recent trend to 61.8% projection of 1074.77 to 2134.71 from 1810.10 at 2465.14.

Pull back in stocks and yield could drag down the Dollar in near term. The dollar index is having a similar technical picture, with bearish divergence condition seen in daily MACD. Near term focus is on 102.52 support. Break there would open up deeper pull back towards 55 day EMA (now at 100.55). Nonetheless, firm break of near term high at 103.65 will re-accelerate near term up trend to next projection target at 105.19.

As for today, Eurozone will release M3 money supply in European session. US will release trade balance and jobless claims.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3530; (P) 1.3564; (R1) 1.3590; More...

USD/CAD breached 1.3588 briefly to 1.3598 but failed to sustain. Intraday bias is turned neutral first. We'd stay cautious on strong resistance from 1.3588 to limit upside and bring near term reversal. Break of 1.3471 support should confirm near term topping, with bearish divergence condition in 4 hours MACD. In that case, intraday bias will be turned back to the downside for 1.3080 support. Sustained break of 1.3588, though, will target next fibonacci level at 1.3838. Overall, price actions from 1.2460 low are still viewed as a corrective move.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is possibly finished at 1.3588 too after hitting 50% retracement of 1.4689 to 1.2460 at 1.3575. Break of 1.3005 would likely resume the fall from 1.4689 through 1.2460 to 50% retracement of 0.9406 to 1.4689 at 1.2048. We'd start to look for reversal signal below 1.2460 to complete the correction. In case of another rise, we'll look for topping sign at 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

Economic Indicators Update

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Trading in financial markets are generally subdued in holiday mood. DJIA closed up 11.23 pts, or 0.06%, overnight at 19945.04, still struggling to take out 20000 handle. S&P 500 also closed up 5.09 pts, or 0.22%, at 2268.88, but stays in recent range. Asian markets are mixed with little movements. US yields closed higher with 10 year yield up 0.02 to 2.563 but like others, stayed in tight range. Notable strength is seen in gold this week, hitting as high as 1151.7, comparing to recent low at 1124.3. There is prospect of a stronger rebound in gold in near term. WTI crude oil also strengthened mildly this week and breached 54 handle. But recent price actions suggest that it's staying in consolidation since hitting 54.51 and more sideway trading is in favor.

In the currency market, Canadian Dollar is notably weaker than others, expect Yen, despite mild strength in oil price. USD/CAD is set to take on key near term resistance at 1.3588. While Canadian dollar outperformed other commodity currencies this month, there is prospect of a pull back in near term. Daily MACD in the AUD/CAD chart has turned above signal line, indicating short term bottoming at 0.9677. Rebound from there would now extend higher towards 55 days EMA (now at 0.9912). However, we'd expect strong resistance from 38.2% retracement of 1.0396 to 0.9677 at 0.9952. Fall from 1.0396 is expected to extend to medium term channel support at a later stage.

A short term bottom was also formed in EUR/CAD at 1.3817. Rebound from there is expected to extend to 55 days EMA (now at 1.4278). We'd be cautious on strong resistance from 38.2% retracement of 1.5279 to 1.3817 at 1.4375 to limit upside and bring another decline next medium term support at 1.3019. However, bullish convergence is seen in daily MACD. Sustained trading above 1.4375 fibonacci level will raise the chance of reversal. That is, whole corrective pattern from 1.6103 has completed and will turn focus back to trend line resistance (now at 1.5166).

On the data front, Japan industrial production rose 1.5% mom in November, below expectation of 1.8% yoy. Japan retail sales rose 1.7% yoy in November, above expectation of 0.9% yoy. Swiss UBS consumption indicator, UK BBA mortgage approvals will be released in European session. US will release pending home sales.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3532; (P) 1.3556; (R1) 1.3598; More...

USD/CAD's rally continues to as high as 1.3579 so far. We'd stay cautious on strong resistance from 1.3588 to limit upside and bring near term reversal. Break of 1.3471 support should confirm near term topping, likely with bearish divergence condition in 4 hours MACD. In that case, intraday bias will be turned back to the downside for 1.3080 support. Sustained break of 1.3588, though, will target next fibonacci level at 1.3838. Overall, price actions from 1.2460 low are still viewed as a corrective move.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is possibly finished at 1.3588 too after hitting 50% retracement of 1.4689 to 1.2460 at 1.3575. Break of 1.3005 would likely resume the fall from 1.4689 through 1.2460 to 50% retracement of 0.9406 to 1.4689 at 1.2048. We'd start to look for reversal signal below 1.2460 to complete the correction. In case of another rise, we'll look for topping sign at 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

Economic Indicators Update

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The Japanese Yen edges mildly lower in very quiet holiday trading today. A bunch of weak economic data is weighing slightly on the currency. Japan national CPI core dropped -0.4% yoy in November, unchanged from October's reading and missed expedition of -0.3% yoy. That's also the ninth straight month of decline in prices. Tokyo CPI core dropped -0.6% yoy, worsened from October's reading of -0.4% yoy and missed expectation of -0.4% yoy. Nonetheless, it's hopeful that the sharp depreciation in Yen since November would eventually provide some inflationary effect on prices that help lift the burden from BoJ for additional stimulus. Also from Japan, unemployment rate rose to 3.1% in November, above expectation of 3.0%. Household spending dropped -1.5% yoy in November, much worse than expectation of 0.2% yoy rise. Housing starts rose 6.7% yoy in November, much lower than expectation of 9.6% yoy.

Yen remains the weakest major currency this month, followed by Euro. NZD/JPY's breach of 83.36 resistance is seen as an indication that medium term decline from 94.01 has completed at 68.88. NZD/JPY received strong support from 50% retracement of 44.19 to 94.01 at 69.10. Further rise would stay in favor as long as 77.68 support holds. Sustained trading above 83.36 would pave the way to retest 94.01. We're not anticipating a break there on first attempt. Meanwhile, break of 77.68 will argue that the cross is developing into range trading between 68.88 and 83.36 instead.

On the other hand, Dollar remains the second strongest major currency for the month, next to Sterling. The greenback has been boosted by expectation of Donald Trumps's expansive policies, surging yield and FOMC's forecast of fast rate hike in 2017. Trump is scheduled to take office as the 45th president of US on January 20, 2017. And Dollar's fate will depend on what policies would Trump actually deliver. Dollar index turned into sideway consolidation after hitting 103.65. But near term outlook will stay bullish as long as 102.05 resistance turned support holds. The index is expected to target 61.8% projection of 78.90 to 100.39 from 91.91 at 105.1.9 next.

USD/JPY Daily Outlook

Daily Pivots: (S1) 117.24; (P) 117.55; (R1) 117.85; More...

USD/JPY is still bounded in consolidation from 118.65 and intraday bias stays neutral for sideway trading. In case of deeper fall, downside of retreat should be contained by 114.76 minor support and bring another rise. Above 118.65 will extend the current rally from 98.97 to test 125.854 high. We'd be cautious on topping at 125.85 on first attempt.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the corrective is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance.

Economic Indicators Update

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The financial markets are generally steady ahead of holiday weekend. Dollar index is back below 103 handle but is staying in tight range between 102.50/103.50. Gold follows and stays in range between 1125/1140 for the moment. Meanwhile, crude oil is engaging in consolidative in a relatively wider range between 50/54. Trading in stock markets are also subdued with FTSE and DAX trading nearly flat in European morning. In the currency markets, bigger movement is found in Sterling today which trading broadly lower except versus Aussie and Lonnie. In particular, GBP/USD's break of 1.2301 support should confirm completion of recent corrective rise from 1.1946. And deeper fall would likely be seen back to 1.1946 in near term.

On the data front, UK Q3 GDP growth was finalized at 0.6% qoq, revised up from prior estimate of 0.5% qoq. Current account deficit widened to GBP -25.5b in Q3. Index of services rose 1.0% 3mo3m in October. Swiss KOF leading indicator was unchanged at 102.2 in December, below expectation of 103.1. German Gfk consumer sentiment rose 0.1 pts to 9.9% in January.

Canada GDP, US new home sales and U of Michigan sentiment final will be released later today.

Happy holidays to our readers, we'll be back on December 27.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2249; (P) 1.2313; (R1) 1.2350; More...

GBP/USD's fall from 1.2774 continues day. Break of 1.2301 support confirms that corrective rise from 1.1946 has completed at 1.2774 already. Intraday bias stays on the downside for retesting 1.1946 first. Decisive break there will confirm larger down trend resumption. On the upside, above 1.2390 minor resistance will turn bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Economic Indicators Update

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Dollar stays in tight consolidation against European majors but strengthens against commodity currencies in holiday trading. In particular, Canadian dollar is weighed down by the dip in oil price. Released in US, initial jobless claims rose to 274k in the week ended December 17, above expectation of 255k. Durable goods orders dropped -4.6% mom in November, slightly better than expectation of -4.9%. Ex-transport orders rose 0.5% mom, above expectation of 0.2% mom. Q3 GDP was finalized at 3.5% annualized, GDP price index at 1.4%. From Canada, retail sales rose 1.1% mom in October while ex-auto sales rose 1.4% mom. Both were above expectation. But headline CPI slowed to 1.2% yoy and BoC core CPI slowed to 1.5% yoy, missing expectations.

ECB said in its monthly bulletin that "the medium-term outlook for global activity remains one of strengthening growth, albeit below its pre-crisis pace." And, "overall, growth appears to be holding up in advanced economies and seems to have bottomed out in emerging market economies." ECB expected inflation to exceed 1% at the turn of the year. However, the central cautioned some risks to outlook including policy uncertainty in US, rebalance in Chinese economy and low raw material prices.

In UK, Gfk consumer confidence rose to -7 in December, above expectation of -8. Gfk noted that consumers "remain relatively confident about their personal financial situation." However, "confidence in the general economic situation...has collapsed in the face of uncertainty about the future both at home and abroad." And, "looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress...of the year to come."

New Zealand GDP grew 1.1% qoq in Q3, up from prior quarter's 0.7% qoq, and beat expectation of 0.8% qoq. Statistics New Zealand noted that the data points to "broad-based growth" with 13 of 16 industries up. Main weakness came from agriculture. Household spending "continued its strong growth" and jumped 1.6%. Exports volumes "remain high" even though growth fell over the quarter. Manufacturing activity also rose "on the back of food beverage, and tobacco manufacturing; and transport equipment, machinery and equipment manufacturing." Also from New Zealand, current account deficit widened to NZD -4.89b in Q3.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0386; (P) 1.0419 (R1) 1.0455; More.....

Intraday bias in EUR/USD remains neutral for consolidation above 1.0351 temporary low. Upside of recovery should be limited below 1.0669 resistance and bring another fall. Below 1.0351 will extend the larger down trend to 100% projection of 1.1298 to 1.0518 from 1.0872 at 1.0092, which is close to parity.

In the bigger picture, break of 1.0461 key support indicates that consolidation from there has completed as a triangle at 1.1298. And, the down trend from 1.6039 (2008 high) is resuming. Current downtrend is now expected to target 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

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New Zealand dollar stays soft today in spite of better than expected data. GDP grew 1.1% qoq in Q3, up from prior quarter's 0.7% qoq, and beat expectation of 0.8% qoq. Statistics New Zealand noted that the data points to "broad-based growth" with 13 of 16 industries up. Main weakness came from agriculture. Household spending "continued its strong growth" and jumped 1.6%. Exports volumes "remain high" even though growth fell over the quarter. Manufacturing activity also rose "on the back of food beverage, and tobacco manufacturing; and transport equipment, machinery and equipment manufacturing." Also from New Zealand, current account deficit widened to NZD -4.89b in Q3.

NZD/USD is staying in tight range of 0.69 at the time of writing. The medium term outlook ins the pair is cautiously bearish. The break of the channel support from 0.6102 argues that corrective rise from there is completed at 0.7484. This is supported by the rejection from 50% retracement of 0.8835 to 0.6102 at 0.7484, and break of 55 weeks EMA. Deeper decline is expected as long as 0.7237 resistance holds. Firm break of 0.6674 support will likely resume the larger down trend through 0.6102 low.

In UK, Gfk consumer confidence rose to -7 in December, above expectation of -8. Gfk noted that consumers "remain relatively confident about their personal financial situation." However, "confidence in the general economic situation...has collapsed in the face of uncertainty about the future both at home and abroad." And, "looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress...of the year to come."

Elsewhere, the economic calendar in US is rather busy today ahead of holidays. US Q4 GDP, house price index, leading indicators and personal income will be featured. Canada will also release retail sales and CPI.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7221; (P) 0.7250; (R1) 0.7266; More...

Intraday bias in AUD/USD remains neutral for consolidation above 0.7221 temporary low. Some consolidations could be seen but upside of recovery should be limited by 4 hours 55 EMA (now at 0.7334) and bring fall resumption. Break of 0.7221 will target key near term support at 0.7144. As noted before, the whole corrective pattern from 0.6826 bottom should have finished. Break of 0.7144 support will likely extend the larger down trend through 0.6826.

In the bigger picture, AUD/USD is staying inside long term falling channel and it's likely that the down trend from 1.1079 is still in progress. Break of 0.6826 low will confirm this bearish case and target 61.8% projection of 0.9504 to 0.6826 from 0.7777 at 0.6122 next. We'll be looking for bottoming sign again as it approaches 0.6008 key support level. Meanwhile, sustained break of 0.7833 resistance will be a strong sign of medium term reversal.

Economic Indicators Update

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Yen trades mildly higher in otherwise quiet markets today. The Japanese Cabinet Office upgraded assessment of the economy for the first time in 21 months. The office said in its December report that "the Japanese economy is on a moderate recovery, while delayed improvement in part can be seen." That compared to prior description that the economy was in a moderate recovery "while weakness can be seen recently." In particular, exports and private consumptions outlook are more upbeat, showing "movements of picking up". Nonetheless, improvement in business investment "appears to be pausing", same as prior assessment. Also, the government cautioned that "attention should be given to the uncertainty in overseas economies and the effects of fluctuations in the financial and capital markets."

The Japanese Yen remains the weakest major currency for the month. But downside momentum is diminishing. Yen crosses turned into sideway trading as USD/JPY, EUR/JPY and GBP/JPY made temporary tops at 118.65, 124.08 and 148.42 respectively. But near term outlook remains bullish as long as 114.76, 120.90, 142.98 support levels hold. CAD/JPY, which is the strongest pair this month, also made a temporary top at 88.90. Some consolidations would be seen in near term. But outlook will stay bullish as long as 85.59 minor support holds. Current rally from 75.80 is expect to head to 61.8% retracement of 106.48 to 74.80 at 94.37 next.

On the data front, UK public sector net borrowing rose to GBP 12.2b in November. Japan all industry index rose 0.2% mom in October. Australia Westpac leading index rose 0.0% mom in November. New Zealand trade deficit narrowed to NZD -705m in November.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 121.83; (P) 122.30; (R1) 122.90; More...

Intraday bias in EUR/JPY stays neutral for consolidation below 124.08 temporary top. As long as 120.90 support holds, further rally is expected in near term. Above 124.08 will target 126.09 key resistance next. Considering bearish divergence condition in 4 hours MACD, we'd be cautious on topping around 126.09. Meanwhile, break of 120.90 will indicate short term topping and turn bias to the downside for 55 days EMA (now at 118.56).

In the bigger picture, price actions from 109.20 medium term bottom are seen as correcting whole down trend from 149.76 to 109.20. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt.

Economic Indicators Update

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US equities surged yesterday on Santa rally, yet DJIA failed to take out 20k handle and closed at 19974.62, up 91.56 pts, or 0.46%. It was, nonetheless, a record high. Meanwhile, S&P 500 also gained 8.23pts, or 0.36%, to close at 2270.76. Treasury yields also closed higher with 10 year yield gained 0.026 to 2.568 but stayed in recently established range. Dollar stays firm and is trading higher against most major currencies for the week, except versus Yen as USD/JPY is stuck in consolidation. In other markets, Gold trading sin tight range between 1125/1145 as sideway consolidation extends. WTI crude oil is trading higher at 53.6 but is held below recent resistance at 54.51.

US president-elect Donald Trump announced on Tuesday the plan to create an infrastructure "task force" for implementing a top level spending program. Meanwhile, the proposed "border adjustment tax" is expected to boost inflation. A key concern is, however, that the loose fiscal policy would likely result in higher budget deficit. US equities are staying in near term bullish trend and will pay close attention on the more details of Trump's plan to be unveiled in January. For moment, DJIA is on course for 61.8% projection of 10404.49 to 18351.36 from 15450.56 at 20361.72.

On the data front, Japan all industry index rose 0.2% mom in October. Australia Westpac leading index rose 0.0% mom in November. New Zealand trade deficit narrowed to NZD -705m in November. UK will release public sector net borrowing in European session. Eurozone will release consumer confidence while US will release existing home sales later in the day.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7233; (P) 0.7247; (R1) 0.7273; More...

AUD/USD formed a temporary low at 0.7221 after breaching 61.8% projection of 0.7777 to 0.7310 from 0.7523 at 0.7234. Intraday bias is turned neutral for consolidations. Recovery should be limited by 4 hours 55 EMA (now at 0.7356) and bring fall resumption. Break of 0.7221 will target key near term support at 0.7144. As noted before, the whole corrective pattern from 0.6826 bottom should have finished. Break of 0.7144 support will likely extend the larger down trend through 0.6826.

In the bigger picture, AUD/USD is staying inside long term falling channel and it's likely that the down trend from 1.1079 is still in progress. Break of 0.6826 low will confirm this bearish case and target 61.8% projection of 0.9504 to 0.6826 from 0.7777 at 0.6122 next. We'll be looking for bottoming sign again as it approaches 0.6008 key support level. Meanwhile, sustained break of 0.7833 resistance will be a strong sign of medium term reversal.

Economic Indicators Update

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The recent selloff in Japanese yen and widening in US-Japan yield differentials have been driven by the FOMC rate hike and expectations of further tightening in US monetary policy. Indeed, BOJ’s action has minimal impact on the phenomena of late. BOJ on Tuesday left its interest rate targets unchanged with the short-term and -10 bps and the 10-year JGB yield at around 0%. The asset purchase program also stays at approximately 80 trillion yen of JGBs annually. The central bank also upgraded its current economic assessment and outlook.

The recent rally in US Treasury yields has sent the JGB yields higher. Meanwhile, depreciation of Japanese yen has accelerated with USDJPY rising to 10-month highs. Yet, the BOJ retained the measure to control the 10-year JGB yield at around 0%. At the press conference, Governor Kuroda, affirmed that the current monetary policy framework was key to sustaining momentum toward achieving the 2% inflation target. It would be premature to consider raising the 10-year yield target for now. He added that the yield target has been set at 'around' 0%. As such, a certain degree of deviation from 0% is acceptable. He added that BOJ is ready to increase regular or fixed-rate JGB purchases if necessary. Kuroda was not concerned about recent depreciation in Japanese yen, noting it has only returned to the level seen in February.

As mentioned in the accompanying statement, Japan’s economy has 'continued its moderate recovery trend' with both exports and production 'picked up 'from 'more or less flat'. The reference that'although exports and production have been sluggish due mainly to the effects of the slowdown in emerging economies' was removed. Meanwhile, BOJ also removed the reference that 'relatively weak developments [in private consumption] have been seen in some indicators'. On the economic outlook, BOJ noted that 'Japan’s economy is likely to turn to a moderate expansion' and removed the previous concern that 'although sluggishness is expected to remain in exports and production for some time'. On inflation, policymakers retained the judgment that 'it is expected to increase toward +2%' but removed the timeline, 'in the second half of the projection period'.

On the monetary policy outlook, BOJ reaffirmed that it would 'make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target'.