Overseas Headlines – December 21, 2016

Dollar retreats from 14-year high, Swedish crown has best day in six months
The dollar took a breather on Wednesday after reaching a 14-year high the previous day, while the Swedish crown chalked up its biggest rise in six months after the Riksbank voted to ease policy further only by the narrowest of margins. The dollar drifted lower, meanwhile, giving back some of the ground gained since the Nov. 8 U.S. presidential election. The greenback has chalked up all its 4.5 percent gains for the year since the election, as traders have bet that Donald Trump’s administration will go on a growth-boosting tax cut and fiscal spending spree.

Sterling edges close to one-month lows vs dollar
Sterling edged close to a one-month low against the dollar on Wednesday, kept under pressure by uncertainty over Brexit negotiations and by a greenback buoyed by expectations for faster U.S. monetary tightening than previously forecast. Data showing Britain’s public finances with a slightly bigger-than-expected deficit in November – but on track to meet new, less ambitious deficit reduction goals – had little impact on the pound, which was trading down 0.3 percent on the day at $1.2331.


JGBs firm in thin trade ahead of holidays, underpinned by BOJ
Japanese government bond prices edged higher in thin trading on Wednesday, as investors wound down for the upcoming holidays. The benchmark 10-year yield fell 0.5 basis point (bp) to 0.060 percent, while 10-year JGB futures finished up 0.08 point at 149.81. In the super long zone, the 20-year JGB yield fell 1 bp to 0.555 percent, while the 30-year JGB yield shed 0.5 bp to 0.660 percent, Underpinning JGBs, Bank of Japan Governor Haruhiko Kuroda on Tuesday quashed market speculation that the central bank may soon consider raising interest rates as Japanese yields have risen in line with global bond yields. Kuroda instead vowed to keep policy loose to achieve the BOJ’s 2 percent inflation goal, even as the BOJ issued a more upbeat economic assessment.