- Japan’s services producer price index rises from 0.5% to 0.8% in February
- BOJ members hint that their easy policy may be in place for some time
The dollar’s bloodbath extended to the Asian session after the Republicans’ “repeal and replace” plans got nixed. Meanwhile, forex traders flocked to the yen amidst the overall risk aversion.
Overall risk aversion – And the bloodbath continues! As I’ve mentioned in my previous posts, the Republicans’ failure to get enough support for its plans to repeal and replace Obamacare inspired concerns that the Donald may not fulfill his other major campaign promises (i.e. tax cuts and infrastructure projects) as well. This is bad news considering that much of the post-election optimism hinged on Trump making good on his yuuuuuge reform plans.
Asian session traders caught up to last Friday’s bearish vibes and dragged the bourses lower. Nikkei, in particular, took extra hits on the back of USD/JPY sliding to its November 2016 lows.
Nikkei dropped by 1.37%, Hang Seng slipped by 0.20%, and Australia’s A SX 200 is down by 0.17%. Only the Shanghai index escaped unscathed with a 0.14% gain at the end of the mid-session break.
BOJ’s summary of opinions – Earlier today the Bank of Japan (BOJ) printed its summary of opinions, which gives us more detailed accounts of the members’ policy insights after the central bank published its decision two weeks ago.
The document confirmed the official statement that says most of the members still believe that maintaining their current policies is still the best way of achieving their 2.0% inflation target at the earliest possible time.
However, it also exposed that at least one member wants to revisit the BOJ’s yield curve target. If you recall, the central bank wants to keep 10-year JGB yields “almost zero” to encourage risk-taking.
But for one member, the jump in JGB purchases in February “revealed the weakness of yield curve control.” One member (who might be the same person above) also voted against setting 10-year JGB yields at “around 0%,” saying that it “should be a little steeper.”
USD – The dollar lost more pips across the board, as Asian session traders priced in the Republicans shelving their “repeal and replace” plans for Obamacare.
EUR/USD is up by 14 pips (+0.13%) to 1.0847, Cable jumped by another 36 pips (+0.29%) to 1.2528, and USD/CHF dropped by 14 pips (-0.14%) to .9878.
JPY – The yen was king of pips during the Asian session, as overall risk aversion and anti-dollar sentiment weighed on the higher-yielding currencies and kept the low-yielding dollar out of the menu.
USD/JPY dropped to its November 2016 lows before ending the session 58 pips (-0.52%) lower at 110.34. Meanwhile EUR/JPY straight up fell by 53 pips (-0.44%) to 119.69, GBP/JPY slipped by 40 pips (-0.29%) to 138.25, and AUD/JPY dropped by 51 pips (-0.60%) to 84.19.
- 8:00 am GMT: German IfO business climate (111.2 expected, 111.0 previous)
- 8:00 am GMT: Euro Zone’s private loans (y/y) expected to remain at 4.9%
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!