Even though US consumer confidence held close to a seven-month high
caused by the buoyant spending this holiday-shopping season, and claims
for unemployment benefits declined, the reports regarding measures to
end Japan’s deflation led the Japanese yen to immense by 8 pips versus
the American dollar in the preceding days trades.
The Yen is
anticipated to win in the upcoming Asian session as Bank of Japan Deputy
Governor Kazumasa Iwata pushes the introduction of an inflation target
of 1.5 percent or higher. After seeing that the current efforts of the
BOJ and the government are insufficient, the Iwata suggests that they
step-up cooperation in fighting deflation through jointly establishing a
fund to prevent financial crises. The central bank aims for
year-on-year growth of 1 percent in the Core CPI while the Liberal
Democratic Party is calling on the BOJ to set the inflation goat at 2
percent. The added suggestion for the government and the BOJ to outline
their resolve and measures to beat deflation and promote structural
reforms sees the prevention of the deflations risks, which will increase
if the CPI growth falls below 1 percent.
The US Unemployment
Rate however is alleged to wane good opportunities for the Greenback as
economists expected the Jobless Rate to remain unchanged at 7.9 percent
in November. What’s more is that the private sector continues to be
fearful that a sharp tightening of the government’s budget could push
the economy into recession, causing them to be cautious about
aggressively spending on labor and capital. In turn, the nervousness of
businesses sees the slowdown of economic activity that will further
impede the US economy from moving back to recovery. While America is far
from getting past the fiscal cliff and the inflation target of Japan
being pushed to be set at a higher level, a sell position is measured
apt for the USDJPY pair.
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