Yen rises versus the majority of peers, as BOJ keeps key interest rate at -0.1%, U.S. dollar maintains recent heights, as FX traders turn their focus to Friday’s GDP data.
The Bank of Japan has kept the interest rate at -0.1%, yen rose shortly after the announcement and during the broadcast of the BOJ monetary policy statement and the publication of their outlook report. The BOJ recommitted to its current, ultra loose, monetary policy, however, its belief that it has targeted and is confident, that growth will continue until 2021, combined with their desire to reach a 2% CPI level, delivered market confidence that the BOJ may rein in the policy, earlier than previously expected.
Therefore, yen rose in early Asian trade and by 9:00am U.K. time, USD/JPY traded at 111.8, down -0.25%, as price stopped short of breaching S1. Versus EUR, AUD, GBP a similar pattern of price action behaviour was illustrated, with AUD/JPY developing the most bearish price action, falling by -0.35%, piercing S1. Partly based on the continued momentum versus the Aussie across the board, after CPI missed the forecast by some distance, during Wednesday’s economic calendar news.
The euro has continued its recent fall versus the majority of its peers, the soft data sentiment readings for Germany, published by the IFO during Wednesday’s trading sessions, has had a far reaching impact, despite only registering as low to medium impact releases. FX analysts and traders have become concerned that the powerhouse of economic growth, for both the Eurozone and the European Union, may be flirting with recession in certain sectors. Evidence of a possible recession, is backed up by the leading indicators published earlier in the month by Markit for Germany, through their series of PMI readings, several of which missed forecasts.
At 9:45am U.K. time EUR/USD traded close to flat, oscillating in a tight range below the daily pivot point, whilst printing a new twenty two month low. For traders who analyse movements off higher time frames, the slump in EUR/USD is best illustrated on a weekly chart, on which the bearish trend can be clearly illustrated, particularly from October 2018 onwards. The euro experienced similar, daily, price action behaviour versus other peers during the early sessions, with the exception of EUR/JPY.
U.K. economic calendar events, were confined to the news that the U.K. monopolies and mergers commission has blocked the merger of Asda and Sainsbury’s, the FTSE 100 index sold off by -0.44% as a consequence, Sainsbury’s share price dived by circa -6%, to reach a level not seen since 1989. There was no positive correlation in the rise of GBP, as sterling recorded early morning falls versus several peers. At 10:00am, GBP/USD continued to be locked under the 200 DMA, trading at 1.288, a low not seen since February 2019, when many FX traders were concerned over Brexit issues. Whilst dollar strength is partly responsible for GBP/USD weakness, the overall stagnation of the U.K. economy and that stagnant process extending to Brexit, has caused a lack of momentum in sterling over recent sessions.
The key USA economic calendar news events this afternoon includes the latest durable goods orders published at 13:30pm U.K. time. Reuters forecast a rise to 0.8% for the month of March, rising from a -1.6% fall in February. As a high impact event, traders who specialise in USD pairs, or who prefer to trade events, should diarise this broadcast based on the historical evidence of its power to move markets. Durable goods orders are often looked upon as an indication of the overall confidence both consumers and businesses have, right ‘at the coal face’ of the USA economy.
The USA BLS will publish the latest weekly and continuous unemployment/jobless claims, which are forecast to reveal marginal increases, unsurprisingly, after unsustainable multi decade lows have been recorded over recent weeks. Futures markets were indicating a flat open in New York for the SPX, with the NASDAQ forecast to rise marginally upon the open.
FX traders who trade events, or who trade the Australasian dollars; the kiwi and Aussie, need to remain vigilant to the latest series of data due to be published by N.Z. authorities late evening on Thursday, at 23:45pm U.K. time. Exports, imports, trade balance and the latest consumer confidence reading from ANZ bank, will be published. Exports, imports and as a consequence the trade balance, are forecast by Reuters to reveal a significant improvement for March. The kiwi dollar could rise if the forecasts are met or beaten, as analysts may translate the data results as evidence that the impact of the China slowdown has evaporated, temporarily or otherwise.