Global Markets:

  • Asian stock markets: Nikkei up 5 %, Shanghai Composite gained 0.80 %, Hang Seng rose 1.30 %, ASX is 0.90 % higher
  • Commodities: Gold at $1186 (-1 %), Silver at $16.16 (-1.50 %), Crude Oil at $80.90 (-0.30 %)
  • Rates: US 10 year yield at 2.332, UK 10 year yield at 2.228, German 10 year yield at 0.850

News & Data:

  • Bank of Japan unexpectedly eases monetary policy further
  • Bank of Japan expands base money target to 80 trillion Yen
  • BOJ: To make ETFs that track Nikkei index eligible for its buying
  • BOJ: Decision on expanding base money target made by 5-4 vote
  • Japan National Core CPI 3.0 %, Expected: 3.0 %, Previous: 3.1 %
  • Japan Natioanl CPI 3.2 %, Expected: 3.2 %, Previous: 3.3 %
  • Japan Tokyo CPI 2.5 %, Expected: 2.7 %, Previous: 2.6 %
  • Japan Unemployment Rate 3.6 %, Expected: 3.6 %, Previous: 3.5 %
  • Australia PPI 1.2 %, Expected: 2.6 %, Previous: -0.1 %
  • Japan Housing Starts -14.3 %, Expected: -17.5 %, Previous: -12.5 %

Markets Overview:

The Bank of Japan surprised markets by further easing monetary policy and expanding their base money target to 80 trillion Yen. USD/JPY rallied sharply from 109.35 and seems unstoppable now. Larger option structures at 111.50 and 112 might slow price action a bit, but the pair will stay bid in London and we could easily see gains extend towards 111.40/50. Meanwhile, the Nikkei rallied more than 5 % and posted the largest intraday gain since 2013. Other major currencies declined on the broad USD strength with EUR/USD falling to 1.2570 and GBP/USD declining to 1.5980. The commodity currencies are holding relatively well as the carry trade becomes attractive again.

Precious metals have dropped to fresh lows on this recent USD rally. Gold is getting close to the key $1180 support level again and a break lower seems imminent. There will be plenty of stops beneath the level, so expect to see a gap lower once it gets taken out. Silver is moving towards the $16 level and the charts suggest there is little support until the $15.00/20 area.

The focus today will be on European CPI figures and the Canadian GDP numbers in the afternoon session. Price action in the major pairs will likely be dictated by the USD/JPY today. Meanwhile, stock markets globally will benefit from the “risk-on” sentiment.

Upcoming Events:

  • 07:00 GMT – German Retail Sales (-1.0 % MoM, 0.8 % YoY)
  • 10:00 GMT – Euro Zone CPI (0.4 % YoY)
  • 10:00 GMT – Euro Zone Core CPI (0.8 % YoY)
  • 12:30 GMT – US Core PCE Price Index (0.1 % MoM)
  • 12:30 GMT – US Personal Spending (0.1 %)
  • 12:30 GMT – US Personal Income (0.3 %)
  • 12:30 GMT – Canadian GDP (0.0 % MoM)
  • 13:55 GMT – US Michigan Consumer Sentiment (86.4)
  • 13:55 GMT – US Michigan COnsumer Expectations (78.2)