Article Highlights

  • BOJ kept monetary policy unchanged as expected
  • Japanese gov’t preparing supplementary 3 trillion JPY budget?
  • BOJ Outlook Report: Downgraded GDP and CPI readings
  • BOJ Kuroda: Economy continued to recover moderately
  • Tokyo core CPI down 0.2% as expected in Sept
  • Japan’s national core CPI down 0.1% vs. expected 0.2% drop
  • Japanese household spending fell by 0.4% vs. projected 1.2% gain y/y
  • New Zealand ANZ business confidence index up from -18.9 to +10.5
  • Australian producer prices up 0.9% vs. 0.3% consensus in Q3
  • Australian private sector credit increased by 0.8% in Sept
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Yen forex traders were on edge in today’s Asian session, eagerly awaiting the BOJ monetary policy decision. Before all that, Japan’s data dump printed mostly weaker than expected figures, as household spending fell by 0.4% year-over-year in September instead of showing the estimated 1.2% gain. The Tokyo core CPI showed a 0.2% decline in price levels while the national core CPI indicated a 0.1% drop.

The BOJ statement initially spurred a yen rally, pushing USD/JPY to a low of 120.28 as the central bank decided to maintain their current easing program. Heck, BOJ member Kiuchi still dissented and voted to taper asset purchases!

Yen bears came out to play during the BOJ press conference, as Governor Kuroda didn’t give any confirmation about potential tax cuts. You see, businessmen had actually been clamoring for a reduction in Japan’s corporate tax in order to boost production and profitability, but it looks like that ain’t happening yet. Aside from that, rumors that the Japanese government is prepping a supplementary budget of 3 trillion JPY led market watchers to speculate that it could be used for fiscal stimulus.

In other news, Australia and New Zealand were able to churn out positive data points today, keeping the Aussie and Kiwi supported against its forex rivals. Australia reported that producer prices picked up by 0.9% in Q3, way stronger than the projected 0.3% uptick, then showed that private sector increased by 0.8% in September. As for New Zealand, the ANZ business confidence index landed back in positive territory to indicate a return in optimism.

AUD/USD is up 28 pips and testing the .7100 handle (+0.39%), NZD/USD is up 46 pips to .6738 (+0.68%), EUR/AUD is down 51 pips to 1.5464 (-0.33%), and EUR/NZD is down 104 pips to 1.6286 (-0.66%).

Forex traders could turn their attention to the euro pairs in the upcoming London trading session since there are a bunch of reports due from the euro region. First up, we’ve got German retail sales data lined up at 8:00 am GMT and a 0.4% rebound is eyed. After that, French consumer spending figures and the Spanish flash GDP are due, then comes the much-anticipated euro zone CPI estimates.

Keep in mind that the ECB has recently expressed its preference to increase their stimulus program in case inflationary pressures weaken further. The euro has been tumbling ever since the headline CPI came in negative last month, but analysts are expecting to see a flat reading this time. Still, worse than expected results could mean another bloodbath for the shared currency so make sure you watch out for these reports!

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U.S. Session Recap

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