BOJ Candidates Face Critical Vote

Prospective Governor Kuroda and the nominees Bank of Japan deputy find out today if they will win approval from Parliament. USD/JPY was flat coming into the session while cable posted its largest one-day gain in a month. The US economy once again showed signs of strength with jobless claims beating expectations. There are 15 trades currently in progress in the latest Premium Insights. The strategy of buying the dip in GBPUSD and AUDUSD paid off, now awaiting the second part of these dual trades. The long in EURUSD to enter at 1.2910 and exit at 1.3010 missed the fill by 1 pip as today's EURUSD low was 1.2911.

All eyes will be on the Japanese Upper House votes on the BOJ nominees at 0100 GMT. Kuroda and Nakaso appear to have the numbers for comfortable approval but Iwata – who favours non-traditional methods – may be a close call.

Indications for Japanese parties suggest Iwata has 119 favourable votes with 118 as the absolute minimum. Several lawmakers, however, may not vote alongside party lines. There are also 5 independents in Parliament and two parties holding 7 seats which have no committed.

Given those numbers, it appears likely Iwata will get the necessary votes and that could spark another round of USD/JPY strength. The pair formed a minor double-bottom at 96.59 on Thursday which could act as a springboard.

The main mover in the past day was cable, which shot above 1.51 from 1.4930. There was no clear catalyst for the jump although there was plenty of chatter about options-related activity and orderflow. Fundamental news came from the BOE's King who said the pound was “properly valued” after saying a strong GDP was unwelcome in November.

King's comments, however, were published after the rise in cable. It's possible (but unlikely) they were leaked and, even if they were, wouldn't be expect to have such a powerful impact. The main takeaway from the strength is that GBP was badly oversold and due for a bounce.

One bounce that keeps on going is the strength in the US economy. On Thursday it was jobless claims, which fell to 332K compared to 350K. The four-week moving average of claims is now at the lowest since the crisis.