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Asia Recap: NZD sold after erroneous RBNZ statement

FXStreet (Bali) - The Japanese Yen and the US Dollar were a touch higher in Asia, with moves contained within limited ranges, with the exception of the Kiwi, which saw an initial sell-off only to erase most losses.

The Kiwi was the liveliest currency in Asia, with an ephemeral sell-off early in the session that was quickly bought up back to NY close levels. The drop came after the RBNZ erroneously re-published last month's currency report, which led to headlines of "NZ currency level unjustified and unsustainable", according to the RBNZ, although that was old news, and a mistake made by the Central Bank, meant to publish a new statement on the introduction of a broader trade-weighted index (TWI) calculation. As soon as traders noticed the error, NZD returned back to pre-RBNZ release levels at 0.7940/50.

AUD/USD traded around 0.8755/60 following an intraday high of 0.8790, with some buying attributed to talks over a possible PBoC rate cut. Bloomberg carried the story noting that the swap market is signaling the first PBoC rate cut since 2012. USD/JPY, which was buoyed by improved risk on Thursday (Fed's Bullard to blame), traded slightly above 106.00. As a reminder, Fed's Bullard (hawk!) said on a Bloomberg interview that “inflation expectations are declining in the U.S,” adding “that’s an important consideration for a central bank, and for that reason I think that a logical policy response at this juncture may be to delay the end of the QE.” These remarks caught the market completely wrong-footed. EUR, GBP and CAD traded in small ranges ahead of Europe.

In the Asian calendar, Japan Foreign investment in Japan stocks fell from previous ¥186.5B to ¥-254.3B in October, while foreign bond investment climbed from previous ¥-179B to ¥796B in October. In China, MNI Business Sentiment Indicator declined to 51.7 from previous 52.2. With regards to Central Bank speeches, BoJ Deputy Governor Iwata, said - via Reuters - that Japan is still half way in meeting 2 pct inflation target, adding that they are "internally making simulations on exit strategy, but too early to consider one." Meanwhile, Bank of Japan (BOJ) Governor Kuroda, speaking in Japanese parliament today, said there is no doubt BoJ will end QQE if japan hits 2 pct inflation and this price level is maintained stably, Reuters reports. Kuroda added: "Too early to debate exit strategy for qqe now, how to exit will depend on market, economic developments at the time. Talking about specific exit strategies now could cause confusion when communicating with markets."

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