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BOJ Governor Kuroda started his second five-year term by scrapping hints of achieving 2.0% inflation anytime soon.

  • New Zealand prints 85M NZD trade deficit in March
  • Tokyo’s core CPI (y/y) up by 0.6% vs. 0.8% expected and previous
  • Japan’s unemployment rate remains at 2.5% as expected
  • Japan’s preliminary industrial production up by 1.2% vs. 0.5% expected, 2.0% previous
  • Japan’s retail sales (y/y) up by 1.0% vs. 1.5% expected, 1.7% previous
  • Australia’s quarterly PPI slips from 0.6% to 0.5% vs. 0.4% expected
  • BOJ maintains monetary policies in April as expected

Major Events/Reports:

BOJ’s policy decision

As expected, the Bank of Japan (BOJ) maintained its monetary policies for another month in April. That is, short-term interest rates is still at around -0.1% while the target for the 10-year JGB yields is still at “around zero percent.”

What really caught our attention was the central bank basically dropping any w̶i̶s̶h̶e̶s̶ statement that Japan’s consumer prices will rise faster than 2.0% anytime soon. Specifically, this phrase from January’s outlook was stricken out of today’s release (emphasis mine):

“Comparing the current projections with the previous ones, the projected rates of increase in the CPI are more or less unchanged. The timing of the year-on-year rate of change in the CPI reaching around 2 percent will likely be around fiscal 2019.

It also didn’t help that Governor Kuroda and his team had downgraded a lot of their projections in their latest quarterly outlook. While they upgraded growth forecasts for FY 2018, they also downgraded inflation estimates for 2018 AND 2019. Yikes!

Luckily for the yen, Asian session traders didn’t seem fazed by the BOJ’s changes.

Mixed risk sentiment

It was a mixed day for the Asian bourses, which saw both extensions and reversals of themes from the previous session.

  • Nikkei is up by 0.57% to 22,446.8
  • Australia’s A SX 200 is down by 0.38% to 5,941.1
  • Hang Seng is up by 0.08% to 30,031.9
  • Shanghai index is down by 0.74% to 3,052.321

Meanwhile, commodity prices continued to reflect increased demand for the dollar, the usual funding currency of the ones listed below:

  • Gold is up by 0.01% to $1,317.04
  • Brent crude oil is down by 0.33% to $74.49
  • U.S. WTI is down by 0.28% to $67.95

Major Market Mover(s):

There were no related catalysts for the move, but the Swiss franc managed to extend its losing streak against most of its major counterparts.

EUR/CHF is up by 12 pips (+0.10%) to 1.1981
CHF/JPY is down by 13 pips (-0.12%) to 110.38
GBP/CHF is up by 21 pips (+0.15%) to 1.3780
NZD/CHF is up by 10 pips (+0.14%) to .6993

Pound bulls went back in the game ahead of today’s U.K. GDP release.

GBP/USD is up by 17 pips (+0.12%) to 1.3930
GBP/JPY is up by 5 pips (+0.03%) to 152.12
GBP/AUD is up by 25 pips (+0.14%) to 1.8437
GBP/CAD is up by 23 pips (+0.13%) to 1.7923

Watch Out For:

  • BOJ’s press conference on tap
  • 5:30 am GMT: France’s flash GDP (q/q) (0.4% expected, 0.7% previous)
  • 6:00 am GMT: Germany’s import prices (0.1% expected, -0.6% previous)
  • 6:00 am GMT: U.K.’s Nationwide house price index (0.2% expected, -0.2% previous)
  • 6:45 am GMT: France’s consumer spending (0.4% expected, 2.4% previous)
  • 6:45 am GMT: France’s preliminary CPI (0.1% expected, 1.0% previous)
  • 7:00 am GMT: Spain’s flash CPI (y/y) to remain at 1.2?
  • 7:00 am GMT: Spain’s flash GDP (q/q) expected to maintain 0.7% growth
  • 7:55 am GMT: Germany’s unemployment change (-15K expected, -19K previous)
  • 8:00 am GMT: SNB’s Thomas Jordan to make a speech in Bern
  • 8:30 am GMT: U.K.’s preliminary GDP (q/q) (0.3% expected, 0.4% previous)