We’re almost in the holiday period now, during which many major markets will be closed or very thin. There isn’t much left in the calendar. Its true that the last few days of the year often see strong rallies where there are strong trends in existence, and I wouldn’t rule that out for Bitcoin, other major Cryptocurrencies, and possibly the U.S. stock market also. Looking at fundamental price drivers, the most important items arrived today with U.S. Final GDP and the Bank of Japan’s monthly statement. The U.S. Final GDP came in at 3.2% which was slightly below the 3.2% which the market had been expecting. That didn’t help the U.S. Dollar, but it was no great disaster for it either. As for the Bank of Japan’s statement, there was nothing surprising about it. There was no change to the negative rate of interest of -0.1%, which has been in effect for quite a long time, although there was one dissenter who argued that the rate of inflation remains so low, there should be a greater loosening of policy.
Japanese inflation, like inflation in many advanced countries, remains stuck at stubbornly low rates: 0.8%, in Japan’s case. The Bank took the opinion, as many other central banks are saying, that the low inflation will pass, and the present monetary course is the correct one. Yet it is unconvincing. The persistence of low inflation with zero or even negative interest rates shows that something is wrong, but little will be done about it in the hope it somehow goes away.
There is a wide consensus among market analysts that Japan will leave its monetary policy unchanged for a long time yet, into 2018 and possibly 2019 as well, as I mentioned in my recent fundamental round-up for the start of 2018.
