Global Markets:

  • Asian stock markets: Nikkei up 0.95 %, Shanghai Composite gained 0.10 %, Hang Seng rose 2.50 %, ASX rallied 0.40 %

  • Commodities: Gold at $1210 (-0.05 %), Silver at $16.85 (+0.05 %), WTI Oil at $52.98 (-1.90 %), Brent Oil at $58.30 (-1.00 %)

  • Rates: US 10 year yield at 1.876, UK 10 year yield at 1.583, German 10 year yield at 0.182

News & Data:

  • Japan Current Account ¥1.44trln, Expected: ¥1.15trln, Previous: ¥0.06trln

  • Japan Adjusted Current Account ¥0.60trln, Expected: ¥0.61trln, Previous: ¥1.06trln

  • Bank of Japan keeps rates and QE programme unchanged

  • Bank of Japan: Japan's Economy Has Continued Moderate Recovery Trend

  • Bank of Japan To Watch Risks, Adjust Policy As Appropriate

  • Bank of Japan: Inflation Expectations Rising From Longer-Term View

  • Bank of Japan: CPI likely to be about 0 % for time being, due to decline in energy prices

  • Bank of Japan: QE has been exerting its intended effects, bank will continue with QE, aiming to achieve price stability target of 2 %

Markets Update:

The Bank of Japan left rates and the size of their quantitative easing programme unchanged, as expected. The market is now waiting for the press conference at 0630 GMT. It is unlikely that there will be any surprises from Governor Kuroda, but JPY has been strengthening somewhat ahead of the conference. USD/JPY is currently declining to fresh intraday lows, after reaching almost 120.50 in yesterday’s NY session. Major support seen at 119.40/50, while stops are expected to be resting through 119.30. EUR/JPY is also under pressure as it broke back below the 130.00 level. First support now seen at 129.55/60.

EUR/USD reached a low of 1.0806 in the Asian session, but USD weakness driven by USD/JPY sales has pushed the pair back towards 1.0850. Overall, sentiment remains bearish and short-term techs have turned bearish again, suggesting 1.07 will be tested soon. Meanwhile, GBP/USD failed to benefit from better than expected PMI data yesterday, as concerns about the upcoming UK elections continue to weigh on the Pound. Key support seen at 1.4735 next, while major short-term resistance eyed at 1.4915/20.

The commodity currencies have gained a bit against the USD overnight, with AUD/USD up 0.50 % at 0.7670. Price action was relatively quiet as the Asian session started, but Japanese names had good appetite for the Aussie Dollar, pushing AUD/USD to fresh intraday highs. The Canadian Dollar benefited from the rally in oil and USD/CAD dropped back sub-1.25. While the Canadian economic outlook remains negative, rising oil prices could certainly keep the CAD supported for a while.

Looking ahead, the focus is now on the Bank of Japan press conference in the early EU session. In the US session, there are no major data releases, but the Fed will release their meeting minutes at 18:00 GMT.

Upcoming Events (British Summer Time):

  • 07:00 BST – German Factory Orders (1.5 % m/m)

  • 07:30 BST – Bank of Japan Press Conference

  • 07:45 BST – French Trade Balance (-€3.8bln)

  • 08:15 BST – Swiss CPI (0.2 % m/m, -1.0 % y/y)

  • 10:00 BST – Euro Zone Retail Sales (-0.2 % m/m, 2.8 % y/y)

  • 14:30 BST – FOMC Member Dudley speaks

  • 19:00 BST – FOMC Meeting Minutes