The yen trade under strong pressure on Thursday

Good Morning,

- The dollar flies against the Japanese yen as surged to a new seven-year high of 118.97 yen, bringing it within sight of the 120 level.

- German index of producer prices for industrial products fell by 1.0% in October 2014 compared with the corresponding month of the preceding year.

- The FOMC minutes were not very surprising last night. The FOMC is not in any hurry to raise interest rates before the middle of next year at the earliest. The FOMC statement did not drop the "considerable period" phraseology to describe the time between the end of QE and the first rate hike. However, the minutes show it was a point of discussion and a compromise was achieved to emphasis the data dependency of the Fed's actions.

- In speeches by many Fed officials it is evident that the decline in inflation expectations is a issue of concern. The minutes revealed that some officials were more concerned about a further breakdown in long-term inflation expectations than they were about growth faltering.

- The yen trade under strong pressure on Thursday, striking seven-year lows against the dollar and a six-year trough versus the euro as speculators poured into carry trades funded by a tide of super-cheap liquidity from the Bank of Japan.

- Credit Agricole’s trading ideas: Short term (up to 1 month): Buy EUR/USD* – with short positioning heavily one-sided, we continue to look for a squeeze into year-end triggered by a combination of Fed push-back and end-of-year window dressing. Buy GBP/CHF* – we anticipate a less-dovish reassessment of the BoE policy profile before year-end. Meanwhile, XAU-related CHF demand ahead of the 30 November Swiss referendum will pass. Buy EM Asia basket – BoJ pressure on Asia currencies may be ready for a short-term pause arguing for a tactical year-end pull-back. Medium term (beyond 1 month): Sell EUR/USD – the growing Fed versus ECB policy contrast will weigh in 2015, but ongoing USD-reserve recycling will prevent a precipitous EUR drop. Buy USD versus the periphery – the rising cost of USD-funding will hurt selected developed and developing markets despite continued BoJ and ECB liquidity injections. In its portfolio, CA maintains a long EUR/USD position targeting 1.31, and a long GBP/CHF targeting 1.58.

- BOJ Monthly Report: Japan's economy has continued to recover moderately as a trend, although some weakness particularly on the production side has remained due mainly to the effects of the subsequent decline in demand following the front - loaded increase prior to the consumption tax hike. Overseas economies -- mainly advanced economies -- have been recovering, albeit with a lackluster performance still seen in part. Exports have been more or less flat. Business fixed investment has been on a moderate increasing trend as corporate profits have improved. Public investment has mo re or less leveled off at a high level.

- Fitch report says that most Asian economies will net benefit from the fall in oil prices. If lower prices are sustained below $90/bbl through 2015, most Asian economies are likely to see, likely to lift economic growth prospects, improve terms of trade, and have a potentially positive credit impact. Fitch’s latest forecast is for oil prices to be below $90/bbl through 2015. China, Japan, Korea and Thailand would see an effective overall income boost from sustained lower oil prices.

- Japan manufacturing production growth accelerates to eight-month high in November, at 52.1 (52.4 in October).

- Flash China Manufacturing PMI at 50.0 in November (50.4 in October), Six-month low. Flash China Manufacturing Output Index at 49.5 in November (50.7 in October), Seven-month low.

- Watch today: German PMI, US CPI, US manufacturing PMI.

Have a nice Day !