During the European morning we get the UK GDP preliminary growth rate for quarter 4 and later on Canada’s CPI rate for December and the US preliminary GDP growth rate for quarter 4 as well as the durable goods orders for December. Please be advised that the last four indicators mentioned will be released simultaneously, hence there may be a somewhat increased volatility especially in the USD/CAD market. As for speakers in the World Economic Forum BoE’s governor Carney, BoJ’s governor Kuroda and IMF’s Christine Lagarde will be speaking in a joint discussion panel at 16:00 (GMT Time). Also US president Trump is expected to speak at the World Economic Forum today and there could be some surprises.
Overall the December meeting minutes revealed that most members shared the view momentum towards achieving price target. Most members shared also view it was appropriate for BoJ to persistently pursue powerful monetary easing. Some bank members though, said that the central bank should consider raising interest rates or slow purchases of risky assets if the economic recovery continues. Overall, the minutes revealed the BoJ dilemma that all suspected: that the quantitative and qualitative easing program in conjunction with the negative interest rates could hurt the Japanese economy if continued in the long run without the expected result for inflation.
The USD/JPY had some turbulence yesterday as it broke the 109.30 resistance level only to later on, surrendering most of its gains. We expect the pair to continue to trade in a sideways manner with a slightly bearish mood as the US financial data due to be released today may weaken the US dollar. Should the pair come under buying interest, we could see it breaking the 109.90 resistance level and aim for the 110.45 resistance barrier. Should it come under buying interest we could see it breaking the 109.30 support level and test the 108.60 support barrier.