Holiday Volumes in Full Swing

In spite of persistent headwinds, Japan is still managing to eke out a small victory, this time in the form of annualized consumer prices.  The headline CPI figure for the month of November rose to 0.50% from 0.10% in October, driven primarily by rising food prices.  However, other figures which strip away the more volatile food component show that core inflation remains firmly in negative territory at -0.40%, marking 9-straight months of falling prices.  This is another headache for policymakers at the Central Bank despite forecasts that inflation will rebound to 1.00% by the middle of 2017.

Adding to the more downbeat news overnight was household spending which slipped -0.60% month over month and the unemployment rate which surprisingly rose to 3.10% from 3.00% during October.  After weakening four of the last five sessions, USDJPY is back on the climb after bouncing off support at 117.00.

According to state media Xinhua, the Chinese economy is set to meet Beijing’s ambitious GDP growth target between 6.50% and 7.00% this year.  In light of a troublesome environment for trade and challenging conditions domestically, the news agency was quick to warn that the economy faces numerous headwinds in 2017.  The main looming issues are centered on increasingly protectionist rhetoric regarding trade alongside chronic overcapacity in certain industries and a cooling property market.

Even with the emphasis on shifting the economy, the industrial sector remains a strong component of the economy, with profits increasing 9.40% year-to-date versus the same period in 2015. Although the Yuan is slightly lower against the dollar as holiday volumes remain below average, Bitcoin prices have pulled back from Friday’s highs after a dramatic rally the prior week sent prices of the cryptocurrency to the highest point since January of 2009.