"The BOJ's monetary policy differs from that of other central banks in that it focuses on changing public expectations. We're seeing broad improvements in the economy, markets, public sentiment. This is the best opportunity to end deflation."
- Haruhiko Kuroda, BoJ Governor
It seems that USD/JPY has found a strong support around 104.60 as the pair refuses to go lower; however, the fact that the pair has soared from 86.66 during the year, supports the case Abenomics helped to push the Yen lower, hence, contributing to the export-oriented economy. Another positive aspect of Shinzo Abe's policies is the fact that consumer prices have advanced at the fastest pace in five years. Core inflation, which excludes fresh food prices, ticked up 1.2% on a yearly basis, beating analysts expectations of a 1.1% gain. The data means the world's third largest economy is less than half-way towards meeting BoJ's ambitious target of 2% by about 2015. In its monthly report the central bank dropped a reference to a word ‘deflation' for a first time in four years.
These are definitely a welcoming sign for Shinzo Abe and his team, however, other data released the same day were less positive and suggested the economy is still far away from stable growth. Hence, wages excluding bonuses and overtime remained unchanged, though ending a 17th straight monthly decline. Moreover, industrial production slowed to 0.1% in November, from a 1.0% rise a month earlier. Finally, the situation in the labour market did not improved as it was expected, as jobless rate held steady at 4.0%. A sharp depreciation of Yen and stabilization of all sectors of the economy, are pointing at economic healing, supporting the case Abe is on the right track.
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