Article Highlights

  • BOJ keeps policies unchanged, JPY soars
  • Japan’s household spending down by 5.3% vs. 4.0% decline expected, 1.2% uptick previous
  • Japan’s core CPI down by 0.3% vs. -0.2% expected vs. 0.0% previous
  • Tokyo core CPI down by 0.3% as expected and previous
  • Japan’s unemployment rate down from 3.3% to 3.2% vs. 3.3% expected
  • Japan’s retail sales down by 1.1% vs. 1.4% decline expected, 0.4% previous
  • Japan’s industrial production up by 3.6% vs. 2.9% uptick expected, 5.2% decline previous
  • Japan’s housing starts up by 8.4% vs. -0.5% expected, 7.8% uptick last month
  • Australia’s quarterly import prices down by 3.0% vs. -0.9% expected, -0.3% previous
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Forex trading was a mixed bag of nuts, as economic reports clashed with central bank speculations. Here’s what happened during the Asian session!

Major Events:

Japan’s data dump – Top and mid-tier data from the Land of the Rising Sun came out mixed with inflation, household spending, and industrial production missing expectations while the retail sales and unemployment rate, and housing starts printing in the green. The yen didn’t see much action though, likely because traders were waiting for the BOJ’s monetary policy decision.

BOJ’s surprise – The Bank of Japan (BOJ) once again surprised the markets, this time by NOT making any changes to its policies. As Forex Gump wrote, the markets were expecting the central bank to step up its stimulus game following the earthquakes in Japan and the yen’s recent gains.

Instead, Kuroda and his gang kept their interest rates at -0.1% and only added 300B JPY for Kumamoto’s post-earthquake projects. The BOJ also cut back its growth and inflation projections, saying that consumer prices would likely reach its 2.0% targets by 2017/2018 rather than H1 2017. Uh-oh.

Not surprisingly, the disappointment pushed the low-yielding yen sharply higher across the board and even inspired intraday reversals for some Asian equities markets. Nikkei is trading 3.61% lower while China’s ASX is down by 0.16%.

Post FOMC and RBNZ moves – The Asian session started off with forex traders extending the themes from the U.S. session. If you recall, the Fed had failed to hint at possible rate hikes in the foreseeable future while the RBNZ kept its rates steady with RBNZ Governor Wheeler only choosing to jawbone the currency.

Major Currency Movers:

JPY – The yen sharply gained against its major counterparts after the BOJ “shocked” the markets by standing pat on its policies.

USD/JPY is down by 268 pips (-2.40%), EUR/JPY is down by 276 pips (-2.20%), GBP/JPY is down by 369 pips (-2.28%), and AUD/JPY is down by 160 pips (-1.89%).

NZD – For most of the session the Kiwi was supported by the RBNZ’s decision to keep its policies steady with only a bit of jawboning on the side.

NZD/USD is up by 91 pips (+1.35%), NZD/JPY is only down by 83 pips (-1.09%), and GBP/NZD is down by a whopping 254 pips (-1.20%).

Watch Out For:

  • 6:00 am GMT: U.K. Nationwide house price index (0.4% expected vs. 0.7% previous)
  • 6:00 am GMT: German preliminary CPI (-0.2% expected vs. 0.8% previous)
  • 7:00 am GMT: Spanish flash CPI (-0.7% expected vs. -0.8% previous)
  • 7:00 am GMT: Spanish unemployment rate expected to remain at 20.9%
  • 7:55 am GMT: German unemployment change (1K expected vs. 0K previous)

See more:

U.S. Session Forex Recap

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