ForexLive Asia-Pacific FX news wrap: Japan CPI up, yen down

The
focus for the session was on Japanese inflation data for November.
All three measures came in above October. The core measure, this is
CPI excluding fresh food, hit its highest in over 40 years. USD/JPY
responded by heading higher, however, with a quick 20 or so point
jump to circa 132.40. In the hours that have followed USD/JPY has
added to its rise, up as high as circa 132.80. Its around 132.60 as I
update

Prior
to Tuesday CPI data from Japan barely raised an eyebrow. Bank of
Japan Governor Kuroda recognized it was rising but insisted it was
transitory, saying it’d begin to fall mid-way through the next
fiscal year. Japan’s fiscal year begins on April 1. The thing is,
Kuroda was also, prior to Tuesday, insistent that he’d not be
widening the tolerance band around the YCC target from +/-0.25%,
saying that to do so would be just like a rate rise. If you’ve been
around this week you’ll know, however, that on Tuesday the Bank of
Japan did widen its tolerance band around the YCC target to +/-0.5%,
and at Governor Kuroda’s press conference following he said it
wasn’t like a rate rise. The muddled (or misleading if you like)
messaging from the Bank of Japan and Kuroda has cost some
credibility.

Elsewhere
across major FX the general tone is of US dollar weakness. Ranges are
not large, but EUR, CAD, AUD, GBP and NZD have all added on points against
the USD. USD/CHF is
a touch better bid.

The
other data release today was from Australia. November Private Sector
Credit continued to dribble lower. RBA rate hikes seem to be
impacting the demand for credit, as you would expect.

On
the central bank front, we had the minutes of the October Bank of
Japan monetary policy meeting. Given Tuesday’s move from the BOJ
these were well stale. Some
noted that members discussed market reaction in the event of a
reduction of policy accommodation (which we got, at the margin, this
week). This is not an unusual point of discussion at BOJ Board
meetings though.