Wednesday, November 12, 2014

USD/JPY higher on speculation about Japan election

     Dollar generally lower in thin trading owing to US holiday
    No apparent reason for USD’s general decline
     USD/JPY higher on speculation about Japan election
    Talk is that Abe may call election as a referendum on the next hike in the consumption tax, delay hike for 1 ½ years. Delay in hiking tax seen as good for growth
    Japan stocks high 7-year high. Higher Japan stocks = higher USD/JPY
    How high can $/¥ go? It used to be overvalued by 37%. With current account surplus falling, it could now be undervalued by 37%. That’d be ¥140. ¥130 seems possible.
     NZD rises on possible future rate hike
    RBNZ financial stability report repeats comments about NZD being overvalued, but says rates may need to rise again “in coming years”
     Today:
    Eurozone: Industrial production for Sep expected to be up mom, but this probably won’t be enough to reverse negative sentiment towards EUR
    UK:  Unemployment rate expected to decline, average earnings to rise, which could give GBP a boost. BoE inflation report to bring new forecasts for growth, inflation

    US: Wholesale inventories for Sep expected to decelerate

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