Asian Session Recap – February 18, 2014

  • No surprises from the RBA’s meeting minutes
  • BOJ maintains asset purchases but expands growth funding program
  • PBoC decreases money supply with repos for the first time in eight months
  • Nikkei closes up by 3.13% at 14,843.24
  • UK CPI and German ZEW on tap

The Asian session was all about the major central banks as the Reserve Bank of Australia (RBA), People’s Bank of China (PBoC), and the Bank of Japan (BOJ) all made waves in the charts.

The RBA was first to go under the spotlight with its decision to drop its easing bias, hinting that it’s more prudent to wait for the effect of its previous rate cuts now that the Aussie has significantly weakened. AUD/USD had popped up by 50 pips from its consolidation around the .9030 area.

The PBoC was next up the stage when it conducted 48 billion yuan worth of 14-day bond repos. The PBoC’s tightening of purse strings is no surprise after the onslaught of shadow bank lending in January. Unfortunately, the central bank’s easing bias might have limited the gains of commodity-related currencies. AUD/USD’s gains was capped at .9080 while NZD/USD broke below yesterday’s lows.

Last but not the least was the BOJ’s decision to keep its interest rates and monthly asset purchases steady. What caught the investors’ attention though, was the central bank’s announcement that the ceiling of pro-growth loans will be doubled from 3.5 trillion JPY to 7 trillion JPY. Judging by Nikkei’s 3.13% gains today and the yen crosses’ trip up the charts, the investors applauded the BOJ’s new plans.

The U.K.’s CPI report is due at 9:30 am GMT and is expected to remain at 2.0%. Germany’s ZEW economic sentiment scheduled at 10:00 am GMT is estimated to drop from 61.7 to 61.5 while the euro zone’s own report is expected to clock in at 73.9 from last month’s 73.3 index figure. Keep close tabs on your trades when these reports are released, fellas!

See also:

U.S. Session Recap

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