JPY Muto remains non committal
EZ French GDP weak as expected
CHF Trade Balance slightly better
CAD Retail and LEI on tap
USD only week chain store sales
The pre-holiday stall appears to have already settled over the FX markets as order flows were visibly slower and prices meandered showing very little directionality in both Asian and European trade. In Japan, Deputy Governor Muto once again remained non-committal with respect to the next rate hike by the BoJ by stating that all policy choices were open to the Monetary Committee including the option of raising rates in December.
In listening to the latest rhetoric from the Japanese monetary officials we get the distinct impression that they would like to tighten rates sooner rather than later, but are constrained by the fear of triggering yet another contraction in Japanese economy. Certainly Prime Minister Abes office has shown a not so subtle preference to maintain rates at present low levels, however, political pressure aside the BoJ will want to maintain its independence in order to preserve its credibility in the global capital markets. Thus, although Mr. Muto reiterated that the BoJ does not wish to surprise the markets, the central bank may do just that by hiking rates 25bp in December.
In large part, the policy decisions in Tokyo will be driven by the consumer actions in New York and all other US locales. If the US Christmas shopping season kicks off with a bang and given low US unemployment, accelerating wage growth and markedly low energy prices, many analysts believe business will be brisk Japanese authorities will feel more confident in their own economic growth which is still primarily driven by countrys export sector. Therefore, rather than the economic calendar, all eyes in FX land this week may well be focused on the figures from Black Friday and beyond hoping that once again the US consumer is able to generate enough demand for global growth to continue.
