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The BOJ’s monetary policy decision was the most closely-watched event for the session. So why was the Loonie the biggest mover? Here’s what happened during the session!

  • Trump agrees “not to terminate NAFTA at this time”
  • BOJ keeps policies unchanged as expected
  • BOJ upgrades growth outlook, downgrades inflation estimates
  • AU quarterly import prices jumps from 0.2% to 1.2% vs. 0.4% decline expected in Q1 2017

Major Events:

BOJ’s monetary policy decision

As market players expected, the Bank of Japan (BOJ) decided to keep its policies steady for another month.

The central bank’s short-term interest rate target remains at -0.1%; its 10-year JGB yield target is unmoved at “around zero percent,” and BOJ Governor Kuroda and his team still plan to “more or less” increase its asset purchases by 80 trillion JPY per year.

One thing to note about the BOJ’s release is that there are two dissenters this month. Takehiro Sato thinks that holding rates at -0.1% and keeping 10-year JGB yields near 0.0% could have “adverse impact on the functioning of financial intermediation.”

Meanwhile, Takahide Kiuchi thinks that the rates should be at 0.1% and that adopting a target for long-term interest rate was not appropriate as it would “entail a risk that the Bank might need to further increase the pace of its JGB purchases.”

Trump agrees not to terminate NAFTA “at this time”

Some time in the middle of the Asian session, the White House printed a readout from Trump’s three-way call with Mexican President Peña Nieto and Canada’s Prime Minister Justin Trudeau.

The readout described the conversation as “pleasant and productive.” More importantly, the release also shared that “President Trump agreed not to terminate NAFTA at this time.

However, the release qualified that the leaders have agreed to “proceed swiftly” to “enable the renegotiation of the NAFTA deal.”

Not surprisingly, the Canadian dollar and the Mexican peso both jumped at the news.

The good vibes didn’t translate to gains in the equities markets, however, as Asian session traders were still smarting from the underwhelming tax announcement from Trump during the Asian session.

Nikkei still slipped by 0.29%, the Shanghai index dipped by 0.40%, Hang Seng inched 0.07% lower, while Australia’s A SX 200 ended the session flat.

Market Movers:

CAD

The Loonie was the biggest winner in today’s Asian session trading after Trump’s decision not to walk away from NAFTA “at this time” boosted sentiment for the Canadian economy.

USD/CAD dropped to 1.3540 after hitting a session high of 1.3649, CAD/JPY popped up by 51 pips (+0.63%) to 82.10, AUD/CAD fell by 43 pips (-0.43%) to 1.0132, and NZD/CAD dipped to .9359 after rising to .9422.

Watch Out For:

  • 6:00 am GMT: Swiss trade balance (3.01B CHF expected, 3.12B CHF previous)
  • 6:00 am GMT: GfK german consumer climate (9.9 expected, 9.8 previous)
  • 6:30 am GMT: BOJ’s Kuroda to conduct a presser
  • 7:00 am GMT: Spain’s flash CPI (y/y) (2.5% expected, 2.3% previous)
  • 7:00 am GMT: Spain’s unemployment rate expected to maintain at 18.6%
  • 9:10 am GMT: RBA’s Philip Lowe to give a speech
  • 10:00 am GMT: U.K. CBI realized sales (6 expected, 9 previous)
  • 11:45 am GMT: ECB to publish its monetary policy decision. Read Forex Gump’s trading guide!