Nikkei Up After Approved BoJ Nominations, Yen Steady

The Nikkei jumps sharply today, while the yen is mildly softer in crosses, as the Japanese parliament finally approved three policy doves to head BoJ. The upper house gave green lights to Kuroda as BoJ governor, while Iwata and Nasako were both approved as deputy governors. Earlier this week, Kuroda pledged that he would do "everything possible" to end the 15 year long deflation. Outgoing BoJ governor Shirakawa said that "achieving the 2% price target is an important duty for the BOJ," but declined to comment whether the central bank could achieve this within two years. Technically, the USD/JPY is still staying in tight range below 96.70 temporary top, and might stay in range for a while. An eventual upside breakout is anticipated soon.

In the U.K., BoE governor King said that the central bank didn't try to depreciate the sterling, but emphasized that "markets determine the level of exchange rate". He also noted that "without the fall in the exchange rate that occured before the crisis to date, our export industry would not be growing at the rate it is, and unemployment would be a good deal higher." He's optimistic that economic recovery in the U.K. is "in sight". The sterling is a bit stronger this week, and recovered against the dollar and euro. But overall outlook remains bearish.

In the eurozone, Spain successfully issued 803M euro of long-term bonds in a special auction. Yet, 10-year yields still closed up +9 bps. After the first day of EU meeting, Herman Van Rompuy, President of the European Council stated that "the situation across Europe is of great concern" but policymakers have pursued "clear and consistent" objectives, such as restoring financial stability, reducing the unemployment rate and improving long-term growth prospects. Meanwhile, news reported that the ECB was discussing how to ease funding costs for SMEs in debt-ridden countries. ECB governing council member Erkki Liikanen stated that "this is a difficult question but I can say it is on our table, under consideration". Yet, President Draghi Mario presented a denial, saying that the central bank is "not at this point in time ... committing or planning anything ..."

On the data front today, inflation data will be the major focus. The Swiss will released PPI, while Eurozone will release CPI. CPI from the U.S. will also be released, and is expected to climb back to 1.8% yoy with core CPI up to 2.0% yoy. The U.S. will also release the empire state manufacturing index, TIC capital, industrial production and the U of Michgan confidence.