Key Overnight Developments
• BOJ Meeting Minutes Show Policy to Remain “Extremely Accommodative”
• Euro, British Pound Keep to Narrow Ranges in Thin Holiday Trading
Critical Levels
The Euro consolidated below the New York session high at 1.4366 while the British Pound continued to oscillate in a choppy range below 1.60. We remain short EURUSD at 1.4881 and short GBPUSD at 1.6648.
Asia Session Highlights
Minutes from November’s Bank of Japan monetary policy meeting offered little by way of new insight. Policymakers said the economy is picking up but still needs close monitoring. The bank reiterated that is would stand ready to respond promptly to market movements and promised to keep monetary policy “extremely accommodative”. A representative from the Ministry of Finance that sat in on the meeting urged the BOJ to recognize the risk of deflation, which seems to have come through in the central bank’s latest interest rate decision as well as December’s monthly report.
Euro Session: What to Expect
The economic calendar is empty in European hours, with a quiet session likely ahead as traders turn their attention away from price action for the Christmas holiday. That said, thin liquidity conditions may prove to amplify volatility to produce significant momentum as November’s US Durable Goods Orders figures cross the wires. Expectations call for an increase of 0.5% versus a -0.6% decline in the previous month, which may help underpin traders’ Federal Reserve rate hike expectations after a Credit Suisse gauge of the priced-in yield forecast for the coming year dropped 5.4% and led the US Dollar lower in New York trading following disappointing New Home Sales figures.
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