Bank of Japan goes negative

29 January, 2016

There was plenty of speculation in the run to last night’s BOJ meeting that they would ease further and even though only a week ago the BOJ governor Kuroda suggested in Davos that further easing was on the cards, a move to negative rates was not expected. Understandably this caused some wild swings in the yen which weakened with USDJPY moving back above 120 and the Nikkei which strengthened. Other evidence of a weak Japanese economy came earlier in the week in the form of poor trade data and so the pressure has been mounting for the BOJ to further ease monetary policy, but doing this via asset purchases wouldn’t be easy due to their already extensive activity in the JGB market which is rather illiquid now as a result, so cutting rates at this moment in time is the only option open to them and they have even signalled that more is to come.

The risk on move in Asia overnight even saw Chinese stocks rise for the first time in four days and this sentiment is following through to the European session on this final day of the month. The recovery in indices throughout this week has been remarkable and just like last night’s BOJ rate decision, come as quite a surprise when you consider what sentiment was like only one week ago. A strong end to the month this week will make investors feel a lot better about themselves and means the overall losses for the month aren’t going to be anywhere near as bad as they looked like they’d be only a few days ago. Later today data to watch out for is Eurozone CPI, US GDP and then the US Michigan Confidence data.


Source  
Calls for a US "digital dollar" rise

A growing number of voices are calling for the U.S. to issue a "digital dollar" as China continues to work on a digital version of its own currency. Users of the U.S...

Death Cross growth abroad threaten U.S. dollar

Storm clouds are gathering over the U.S. dollar, threatening a two-year rally in the currency that has squeezed corporate profits and angered...

Will the BoJ and the ECB join the Fed?

Monday is a day off in the American markets due to the Martin Luther King's Day. Because of the holiday, trading on other markets also promises...


More data confirms positive market sentiment

Markets reacted sluggishly to the vote in the US House of Representatives, which initiated the third impeachment of the president in the history of the country...

Risky assets prevail in the markets

The end of the year on the financial markets turned out to be very positive. Asian stock markets ply near multi-month highs; the American markets are...

Most Momentous Rate Decision

The world's oldest central bank stands to be the most significant this month as it pioneers a shift away from negative interest rates. Sweden was among...


OPEC considering deeper cut to oil production

Global oil-producing group OPEC and its allies are meeting in Vienna, with expectations raised over whether the alliance will make further cuts to its output...

Peaked trade optimism?

Throughout the past week, the US dollar has received support after strengthening expectations that the Fed will take an extended break after three consecutive rate cuts...

Russel 2000 doesn't support S&P500 optimism

S&P500 closed Monday at historical highs, adding 0.55% on the day close. Both expected new Fed interest rates cut and possible...