Global Markets:
- Asian stock markets: Nikkei up 0.90 %, Shanghai Composite and Hang Seng both rallied 2.00 %, ASX 200 gained 0.05 %
- Commodities: Gold at $1114.80 (-0.10 %), Silver at $14.25 (+0.05 %), WTI Oil at $33.60 (+1.15 %), Brent Oil at $35.20 (+1.15 %)
- Rates: US 10 year yield at 1.97, UK 10 year yield at 1.69, German 10 year yield at 0.40
Bank of Japan:
- Bank of Japan Adopts Negative Interest Rate: -0.1%
- Bank of Japan voted 5-4 on negative rates
- BoJ: Risks Are Skewed To Downside For Price Scenario
- BoJ: FY2015 Core CPI Forecast Is 0.1 %
- FY2016 Core CPI Forecast Is 0.8 %
- FY2017 Core CPI Forecast Is 1.8 %
- BoJ: CPI To Hit 2% Target Around 1h Of FY2017
- BoJ: FY2015 GDP Forecast Is 1.1%
- FY2016 GDP Forecast Is 1.5%
- BoJ: Will Cut Rate Further If Needed
- BoJ: Risks Are Skewed To Downside For Economic Scenario
News & Data:
- Japan CPI (YoY) Dec: 0.2% (exp 0.2% prev 0.3%)
- Japan CPI Ex-Fresh Food (YoY) Dec: 0.1% (exp 0.1% prev 0.1%)
- Japan Unemployment Rate (Dec): 3.3% (exp 3.3% prev 3.3%)
- Japan Overall Household Spending (YoY) Dec: -4.4% (exp -2.5% prev -2.9%)
- UK GfK Consumer Confidence (Jan): 4 (exp 1 prev 2)
- Australia PPI (QoQ) Q4: 0.3% (prev 0.9%)
- Australia PPI (YoY) Q4: 1.9% (prev 1.7%)
- New Zealand M3 Money Supply (YoY) Dec: 8.1% (prev 8.4%)
- New Zealand Building Permits (MoM) Dec: 2.3% (prev 1.8%)
- PBoC Fixes Yuan Reference Rate At 6.5516 (prev 6.5528)
Markets Update:
The Bank of Japan surprises markets overnight by introducing negative interest rates. Most market participants were expecting no change in the BoJ policy and were caught by surprise. USD/JPY immediately rallied to a high of 121.40 after the announcement, but retraced most of the gains within the next half hour. USD/JPY is consolidating around 120.00 into the European open.
The price action in USD/JPY affected most major currency pairs as well. EUR/USD fell from 1.0930 to 1.0885 after the BoJ announcement, but bounced from there and quickly recovered back to 1.0940. The impact on GBP/USD was small, the pair only fell 20 pips, to 1.4335.
The commodity currencies remain bid with AUD/USD back above 0.71 after support at 0.7070 held. NZD/USD is struggling with resistance at 0.65, but has retraced most of the post-RBNZ losses from Wednesday evening.
Upcoming Events:
- 06:30 GMT – French GDP
- 07:00 GMT – German Retail Sales
- 07:45 GMT – French CPI
- 08:00 GMT – Spanish GDP
- 08:00 GMT – Spanish CPI
- 09:00 GMT – Italian PPI
- 10:00 GMT – Euro Zone CPI
- 13:30 GMT – US GDP
- 13:30 GMT – Canadian GDP
- 14:45 GMT – US Chicago PMI
- 15:00 GMT – US Michigan Consumer Confidence
- 18:30 GMT – FOMC Member Williams speaks
- 20:30 GMT – CFTC Positioning Data
