Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
European Stocks Flat as Oil Prices Rise, US CPI in Focus 
Singapore Central Bank’s Exchange Rate Policy Explained: Why MAS Uses the S$NEER Instead of Interest Rates 
RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
Canada, US Hold Fresh Trade Talks as August 19 Tariff Deadline Nears 
UK Retail Sales Rise as World Cup and Heatwave Boost Food, Pubs and Clothing 
BOJ Holds Rates at 1% as Inflation Outlook Eases, October Rate Hike Still Possible 
BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
Wall Street Slips as Oil Prices Surge 5% on Iran-Hormuz Uncertainty 
Singapore Raises 2026 GDP Growth Forecast to 4.5%-5.5% as AI Boom Fuels Economy 
England Drought Expands to 71% as Heatwave Deepens Water Crisis 
Yen Stabilizes After Intervention Slide as Australian Dollar Hits Eight-Week High 
The Bank of Japan (BoJ) in its November 1 monetary policy meeting mentioned its optimism over the growth of the economy, with a moderate rate of recovery observed in the global demand. The central bank is expected to maintain an easing bias, but shall not remain compelled to ease in the medium term.
We foresee that the USD/JPY currency pair will test the 130 level towards the end of 2017, for the first time since April 2002. Also, the 10-year Treasury yield spread will likely widen, at over 250 basis points for the first time since 2010.
The BoJ aims at achieving the 2 percent inflation target with expectations of buying around JPY80 trillion of government bonds per year. Upward pressure on global yields since the US election could potentially mean more QE, though.
If Trump successfully implements his fiscal plan, consumer inflation will surely rise, giving the Federal Reserve wider space for an interest rate hike. Thereby, rising Fed fund rate will increase the cost of borrowing. After the Presidential election result, JPY witnessed a massive selling against U.S. dollar, sending the USD/JPY higher by 17 percent to 118.67 in just a month’s time.
Lastly, the BoJ’s first two-day monetary policy meeting for 2017 will take place on January 30-31. We foresee that the central will remain committed to holding its 10-year JGB yields near zero, while keeping interest rate steady at -0.10 percent.
