Global Markets:

  • Asian stock markets: Nikkei up 2.00 %, Shanghai Composite lost 0.90 %, Hang Seng gained 1.20 %, ASX rallied 2.50 %
  • Commodities: Gold at $1198 (+0.25 %), Silver at $15.92 (-0.10 %), Crude Oil at $55.12 (+1.40 %)
  • Rates: US 10 year yield at 2.23, UK 10 year yield at 1.88, German 10 year yield at 0.62

News & Data:

  • Bank of Japan Interest Rate Decision 0.10 %, Expected: 0.10 %, Previous: 0.10 %
  • Bank of Japan QE ¥80trln, Expected: ¥80trln, Previous: ¥80trln
  • BOJ: Economy has continued to recover moderately; sees recovery continuing
  • BOJ: Inflation expectations rising from longer term view; core cpi likely around current level for time being
  • BOJ: To continue QQE until stable 2% inflation
  • BOJ: Exports have picked up; industrial output has started to bottom
  • BOJ: Europe's low inflation, debt problem are risks for Japan
  • New Zealand ANZ Business Confidence 30.4, Previous: 31.5
  • UK GfK Consumer Confidence -4.0, Expected: -1.0, Previous: -2.0
  • Asian Stocks Extend Global Rally on Fed as Oil Pares Drop (BBG)
  • BOJ Keeps Record Easing as Oil’s Fall Challenges Kuroda (BBG)
  • Yellen’s Inflation Lessons: Targets Matter, Oil Shocks Dissipate (BBG)

Markets Update:

Asian equities are mostly higher on the day, inspired by yesterday’s rally in US stocks. Meanwhile, precious metals are basically unchanged, while Crude Oil gained +1 % overnight. In FX, it was very quiet with USD/JPY the only major pair that had a decent intrasession move. There were no major data releases in Asia, with the BoJ rate decision the main event. The bank left rates unchanged at 0.10 %, as well as the QE programme at ¥80 trillion. No surprises there.

Looking ahead, it could stay quiet in Europe with only tier-2 data releases scheduled. In the NorAm session, Canada will release its inflation figures. The headline figure is expected at -0.1 % month-on-month and 2.2 % year-on-year. Note that there are several large option expiries for today’s NY cut, including a huge €10 billion expiry at 1.23 in EUR/USD and €6bln at 1.2350 & €3.1bln at 1.2250-60. Please see below for the complete list of expiries.

In EUR/USD, key support noted at the December 08th low of 1.2245. Below there, next support is seen at 1.2040 (2012 low). To the topside, imminent resistance seen in the 1.2340/50 area and then 1.2420 & 1.2470 (post-FOMC high). GBP/USD should find support at 1.5600/05 (Dec 15 & 16 low), with 1.5545 now the pivotal level to the downside. Resistance eyed at 1.5735 and then 1.5780.

In USD/JPY, the key levels are 119.95/120.00 and 120.90 to the topside and 118.23 & 117.35 to the downside. AUD/USD bounced ahead of the 0.81 level, but the next significant support level lies at 0.8066 (2010 low). To the topside, immediate resistance noted at 0.8202 (Dec 18 high) and then 0.8235 (post-FOMC high).

Option Expiries (NY Cut, 15:00 GMT/10:00 ET):

  • EUR/USD: 1.2200 (1.5BLN), 1.2250-60 (3.1BLN), 1.2300 (10BLN), 1.2350 (6BLN)
  • USD/CHF: 0.9750 (877M), 0.9800 (525M), 0.9850 (500M), 0.9900 (1.9BLN)
  • GBP/USD: 1.5550 (300M), 1.5600 (335M), 1.5700 (1BLN)
  • EUR/GBP: 0.7750 (300M),0.7865-75 (400M), 0.7915 (350MN)
  • AUD/USD: 0.8185 (1.4BLN), 0.8200 (1.1BLN), 0.8255 (1.4BLN)
  • NZD/USD: 0.7600 (1.7BLN), 0.7750 (450M), 0.7770 (280M)
  • USD/CAD: 1.1700 (480M), 1.1650 (437M), 1.1600 (1.1BLN), 1.1500 (775M),
  • USD/JPY: 117.00 (4.8BLN), 118.50 (1.3BLN), 119.00 (2.3BLN), 119.50 (1.2BLN),
  • 120.00 (6.6BLN)

Upcoming Events:

  • 07:00 GMT – German PPI (-0.2 % m/m, -1.2 % y/y)
  • 07:00 GMT – German GfK Consumer Climate (8.8)
  • 09:00 GMT – Euro Zone Current Account (€27.4bln)
  • 12:30 GMT – Canadian CPI (-0.1 % m/m, 2.2 % y/y)
  • 12:30 GMT – Canadian Core CPI (0.1 % m/m, 2.4 % y/y)
  • 12:30 GMT – Canadian Retail Sales (-0.2 % m/m)
  • 12:30 GMT – Canadian Core Retail Sales (0.1 % m/m)idat