The safe-haven yen was under pressure on Friday morning

Good Morning,

- Yen slips vs dollar as BOJ maintains massive stimulus as expected.

- The safe-haven yen was under pressure on Friday morning, as risk assets staged a broad recovery.

- The Swiss franc plunged on Thursday after Switzerland's central bank surprised by imposing negative interest rates on deposits.

- French President Francois Hollande said that he would like to see the euro weaker against the dollar but added that the exchange rate was rapidly approaching a point of balance.

- The U.S. dollar index, which, edged up on the day to 89.288, within sight of the Dec. 8 high of 89.550, a five-year peak.

- Nomura on EUR/USD: It took fairly severe risk aversion to see a squeeze in EURUSD up to above 1.25 earlier this week; and now that markets are relaxing (and the Fed helping) we are quickly back to the lows, notes Nomura. "The correlation between risk assets and the Euro is linked to the structure of capital flows. When risk appetite is there, there is steady capital outflows from the Eurozone. When there is risk aversion, there can be temporary repatriation, and the Euro benefits. The key to the Euro outlook in 2015 is the degree to which Eurozone investors will push capital abroad," Nomura argues. "We think 1.20 will be reached by January, and we can see 1.15 by Q2 2015...The levels, for shorts, may be worse in early January when most investors will be re-engaging,".

- The Bank of Japan maintained unprecedented stimulus, as Governor Haruhiko Kuroda’s bid to stoke inflation faces increasing challenges from the tumble in oil prices. The central bank will boost the monetary base at an annual pace of 80 trillion yen ($672 billion), it said in a statement, as forecast by all 33 economists surveyed by Bloomberg News. Oil has lost more than a quarter of its value since the BOJ boosted easing Oct. 31 to jolt the world’s third-biggest economy out of a “deflationary mindset.” The central bank rejects the idea that more stimulus is needed to prevent cheaper oil from damping inflation

- BNP Paribas' positioning analysis for major currencies: The following positioning analysis are based on a variety of indicators such as BNPP Client exposure – Internal sales desks’ estimate of FX investor exposure, IMM – The commitment of traders (COT) is a widely used proxy for US-based hedge-fund/CTA activity, and FX Fund position tracker – Regression based decomposition of currency fund positioning. -At +36, long USD positioning is at its highest level in 2014, but below the May 2012 reading, leaving scope for the USD to strengthen further into 2015. -EUR positioning remains neutral at year end. -BNP Paribas Positioning Analysis for the JPY indicates a score of -27 compared with the November reading of -39. -There is scope for bearish JPY positions to rebuild into 2015.

- Yuan forwards are trading at the biggest discount to the official exchange rate in six years as China’s economic growth slows and the dollar surges amid expectations for higher U.S. interest rates. Twelve-month non-deliverable forwards dropped 0.5 percent, the most since March 10, to 6.3482 a dollar on Thursday in New York.

- China has revised up the estimated size of its economy for 2013 by 3.4 percent to 58.8 trillion yuan ($9.5 trillion), the National Bureau of Statistics said on Friday, but said the revision will not affect economic growth this year. That marks an increase of 1.9 trillion yuan, or $305 billion, in the size of the Chinese economy that year, slightly below the entire gross domestic product of Malaysia during the same period, according to World Bank statistics. The increase was mainly due to an upward revision of contribution from the services sector.

Have a nice Day!