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Asian markets had mixed results last night ahead of the Bank of Japans decision on monetary policy and continuing volatility in the Chinese interbank lending market.  The Nikkei 225 finished up 11 points after initially remaining cautious ahead of the policy announcement, the decision to maintain easing lead to a late surge to finish in the black.  The Yen remains at its weakest for five years at over Y104 to the dollar.  The Hang Seng is currently down 40 points as the interbank lending rate fluctuated between 4.8% and a high of 9.5% on the day as banks scrambled for end of year liquidity causing it to dry up. The people’s bank of China was then forced to make an emergency liquidity injection. 

FTSE futures are up 19 points approaching the open despite the BOE becoming more pessimistic about the UK’s rate of economic recovery after publishing a detailed analysis of their forecasting errors.  The bank went as far as describing the MPC’s forecasts since the start of the crisis as ‘tending to over predict growth and under predict inflation”.  With a number of economic data being released for the UK at 9.30am, current account and final GDP q/q figures headling, speculators could latch onto this story should the figures miss forecasts.

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