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Forex Flash: BoJ looks to make clean break with past under Kuroda – UBS

Overnight, BoJ Governor-nominee Kuroda struck an unmistakably dovish tone, advocating a range of additional easing measures in order combat deflation. He was careful to avoid sounding too radical though explicitly rule out directly underwriting JGBs for example. According to Research Analyst Gareth Berry at UBS, “This arguably boosts his chances of securing parliamentary confirmation by not raising too many eyebrows amongst the DPJ opposition.”

Indeed, Kuroda signaled a clear departure from existing BoJ orthodox thinking, noting that responsibility for beating deflation lies squarely at the BoJ. He was also openly critical of previous policy decisions, noting that tightening in 2006 was 'clearly a mistake', as was the abandonment of the zero interest rate policy in 2000. “Based on these remarks, it seems investors can expect a clean break with the past.” Berry adds.

Fundamental Morning Wrap: Italian stalemate Al fresco

This morning´s institutional research sees most focus fall on the ongoing Italian situation, with no significant signs of a break through emerging at all, so the deadlock is expected to continue for some time to come, contributing to EUR softness ahead. Looking to the UK, there is indecision over whether a further bout of QE is on its way and in Japan, nominee BoJ Governor has issued a war cry in the battle against deflation.
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Forex: GBP/USD retraces losses after touching 1.5000

Having visited the 1.5000 psychological level right after the release of UK PMI Construction, the GBP/USD found there support for a bounce back to its opening price. The pair is currently surrounding the 1.50303/35 area.
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