Euro Market Open

Bank of Japan Gets Aggressive, Vehicle Production Sees Record Drop

Thursday, 25 December 2008 04:13:37 GMT  |  Ilya Spivak, Currency Analyst

The Bank of Japan is looking past interest rates at aggressive new measures to boost companies’ access to credit according to the minutes from November’s policy meeting. Japanese vehicle production fell 20% in the year to November, the most in at least 10 years.

Key Overnight Developments

• Bank of Japan Looking Beyond Interest Rates To Boost Credit Access
• Euro Drifts Higher, British Pound Flat Ahead of Christmas Holiday


Critical Levels



The Euro moved higher in overnight trading drifting ever-closer to the recent range to near 1.4020 that has held since Monday. British Pound price action was confined to a narrow 33-pip range below 1.4760.


Asia Session Highlights


Minutes from the November meeting of the Bank of Japan saw the monetary policy team at its most aggressive in recent memory. Governor Maasaki Shirakawa and company saw economic conditions as “deteriorating” and future outlook as “highly uncertain.” Members paid particular attention to assuring a supply of available credit to Japanese companies and pledged to consider alternative measures of boosting liquidity with rates already within a hair of zero. Indeed, the BOJ has since moved to accept lower-grade corporate bonds and commercial paper (short-term corporate debt with maturities typically no longer than 9 months) as collateral for loans. This represents a key policy shift for the typically conservative central bank: by accepting companies’ commercial paper, the BOJ is taking on direct credit risk should they default on their obligations.

Vehicle Production fell -20.4% in the year to November, the most in at least 10 years and the worst result on record. Japanese manufacturing sentiment has fallen to record lows, with companies are scaling back as global economic slowdown and a sharply higher Yen undermine demand for Japanese products.


Euro Session: What to Expect 




To contact Ilya regarding this or other articles he has authored, please email him at ispivak at dailyfx dot com.

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