Article Highlights

  • BOJ surprised markets with decision to ease again
  • Nikkei up 4.38% for the day
  • Japanese household spending down by 5.6% y/y in Sept
  • Tokyo core CPI down from 2.6% to 2.5%, national core CPI down from 3.1% to 3.0%
  • Japanese unemployment rate climbed from 3.5% to 3.6%
  • Australian quarterly PPI up by 0.2% as expected
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Trick or treat? Forex traders were spooked by the BOJ’s decision to ease again through an expansion of their monetary base. USD/JPY surged past the 110.00 handle all the way up to the 111.00 major psychological mark right after the announcement while the Nikkei posted a 4.38% gain for the day.

Other yen pairs joined in the party, as EUR/JPY jumped 1.15% to the 139.50 level and GBP/JPY chalked up a 1.35% gain so far at the 177.00 mark. AUD/JPY is up 1.06% at the 97.50 area and CAD/JPY is holding on to a 1.39% win near the 99.00 handle.

Data from Japan reflected weakness, as the Tokyo and national core CPI readings posted declines in price levels. Household spending was weaker than expected, as it logged in a 5.6% drop y/y versus the estimated 4.0% decline. Joblessness ticked higher, with the unemployment rate climbing from 3.5% to 3.6%, while housing starts showed a smaller than expected annual decline of 14.3%.

In Australia, the quarterly PPI came in line with expectations of a 0.2% gain. This was enough to recover from the previous period’s 0.1% decline, hinting at a potential rebound in inflationary pressures down the line. AUD/USD is down 0.44% so far while NZD/USD is looking at a 0.16% loss as of this writing.

The forex calendar shows that only a few medium-tier reports are due from the euro zone today. These are the German retail sales and French consumer spending figures, both of which are likely to show weakness. Also due from the euro zone are the CPI flash estimates, which might remind traders that deflation is still a possibility in the region. If so, the euro might give up more ground to its major counterparts.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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