Kuroda strikes optimistic tone on Japan's recovery in 2017

In a rare exclusive interview with the Nikkei overnight, Bank of Japan Governor Haruhiko Kuroda continued to strike a more optimistic tone stating that he sees steady Japan recovery next year. He said that brightening prospects for the global economy, rising Japanese stock prices and retrace in yen gains will allow Japan's economy to sustain a steady economic recovery throughout next year.

Kuroda noted that there is a need for more fiscal reforms. Regarding future policies under Trump presidency, Kuroda said he did not expect the new administration to implement extreme steps such as trade restrictions as they would hurt the US economy as well as well as the economies of trade rivals.

Upbeat comments from the Governor reinforced market expectations that the central bank will hold off on expanding stimulus in the foreseeable future.

"There are many things we can do if necessary" to jump-start growth, Kuroda said in an interview with Nikkei published on Thursday, dismissing views held by some analysts that the BOJ has run out of policy ammunition after more than three years of aggressive money printing.

The latest IMM report showed that speculators have sharply increased short yen positioning over the last month reaching its highest level since the same period of last year. USD/JPY slipped below 117 handle, intraday bias was lower. We see scope for test of 20-DMA at 116.16. Break below could see further drag upto 114.75.