The Australian dollar is deemed to maintain its incline opposite the Japanese yen today after ratings agency Standard & Poor’s affirmed Australia’s triple-A credit rating, forecasting steady growth. Meanwhile, the Yen is likely to be under pressure as Japan’s Prime Minister Shinzo Abe is awaited to nominate Asian Development Bank President Haruhiko Kuroda as the next Bank of Japan chief today.
The S&P said that despite the housing market appearing vulnerable to a downturn, Australia’s strong fundamentals buttress its AAA sovereign rating. In a report card on Australia’s economic health, the agency said that the economy is likely to keep growing steadily despite a forecast peak in mining investment this year and the related dip in economic activity. The S&P report stressed that Australia remains on a “sound path,” with strong institutions, low public debt and a sound financial system. S&P, however, reiterated caution over the country’s vulnerable housing sector and high household debt levels which could make public finances less resilient to economic shocks. Nonetheless, these risks are seen to be largely mitigated for the moment. Treasurer Wayne Swan remarked that the report delivered a vote of confidence in the economy. Further appending the optimism is the Housing Industry Association’s New Home Sales report for January released earlier today. Sales rose 4.2 percent last month, posting a fourth straight monthly increase.
In Japan, Prime Minister Shinzo Abe is set to nominate ADB head Haruhiko Kuroda as the next BOJ Governor today, along with two deputies, in efforts to ramp up his bid to breathe new life into the world’s third largest economy. Members of the main opposition party have expressed that they will back Kuroda, likely easing his passage. While the DPJ signaled resistance to one anticipated deputy pick, namely Kikuo Iwata, an advocate of greater government oversight of the BOJ, the two other opposition parties showed support, increasing the chance Abe is granted approval for his full slate. Kuroda, a stern critic of the BOJ, has been a vocal supporter Prime Minister Shinzo Abe’s call for the central bank to launch aggressive easing measures and adopt a 2 percent inflation target even before the BOJ set such price objective last month. Meanwhile, Kikuo Iwata, tipped to be one of two deputy governors, has long pushed for the BOJ to up its easing efforts and has advocated changing the law governing the central bank to give the government greater say in setting policy goals. On expectations of more aggressive action from the BOJ, the Yen is apt to decline, warranting a long position for the AUD/JPY.
For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions