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BOJ takes action

Today's news headlines:

‘Yen surges as Kuroda’s yield cap shock heralds BOJ normalisation’. The Bank of Japan increased the cap on the 10-year yield overnight to 0.5% from 0.25% previously in a major change in the country's yield control measures. Markets interpreted the move as the central bank setting up a future exit from its current accommodative monetary policy stance. The willingness to allow borrowing costs to rise appears to be a prelude to a potential BOJ interest rate hike next year as Governor Kuroda’s term comes to an end in April 2023. (Bloomberg) 

‘China Covid death reports spread amid virus data black box’. As China shifts away from its Covid-Zero policy and case numbers rise, the number of deaths reported by the state has remained low. Those on the ground in crematoriums are seeing the reality of increasing caseloads leading to greater fatalities throughout the country, not just in Beijing, which is currently being reported. The guidelines for what constitutes a Covid fatality have since been narrowed as China attempts to downplay the effects of exiting Covid measures with no real support mechanism in place. (Bloomberg) 


Asia shares and US futures declined overnight following the Bank of Japan’s shift in its yield control policy, while the Yen strengthened as USD/JPY dropped to a four-month low. The Dollar Index is down 60 basis points in early trading, while Sovereign bond yields trade higher across the board.  


New Zealand ANZ Business Confidence (Dec): -70.2 
Bank of Japan Policy Rate (Dec): -0.10% (est. -0.10%) 
German PPI MoM (Nov): -3.9% (est. -1.7%) 
Canada Retail and Core Retail Sales MoM (Oct): 1:30PM
US Housing Starts (Nov): 1:30PM
Eurozone Consumer Confidence (Dec): 3:00PM

Interbank rates*:

GBP/USD – 1.2154
GBP/EUR – 1.1459
EUR/USD – 1.0607
USD/CAD – 1.3665 


Please contact your Dealer about any upcoming FX requirements you may have, or call +44 (0)20 3465 8200. 

*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.