Bank of Japan Governor Ueda spoke today, giving no indication of when he expected to exit ultra-loose policy. Ueda said that given the trend he sees for inflation is for it below 2% its still too early talk about even a simulation study for exit. Nevertheless, traders latched on to him just talking about exit, even if vaguely, and stuck a bid behind the yen. USD/JPY dropped to lows circa 146.70 before stabilising.

Also from Japan today the auction of 30 year bonds showed the ‘tail’ as the longest on record. The ‘in a nutshell’ explanation of a tail is it shows how much variation there was among the buyers in an auction, the gap between the average price and the cut-off price (the lowest priced bond in the auction). A large price tail is not a positive sign, it suggests the demand for the bonds was lower than expected. Investors in Japan are seeking higher yield premiums.

From China we had trade data for November, with exports coming in better than expected and rising for the first time in 14 months. Offsetting this good ‘green shoots’ news was a decline for imports well under estimates, another sign of a stumbling domestic economic recovery.

Apart from USD/JPY the US dollar ticked higher. Most notable against AUD, NZD and CAD.

usdyen wrpa chart 07 December 2023