Australian Q2 GDP was released overnight, surprising to the upside with a 1.2% QoQ, 1.4% YoY rate of expansion, beating consensus estimates of 1.0% QoQ, 0.7% YoY. The encouraging numbers have sent AUDUSD rallying to highs of 1.0610 in early trade, and allowed risk appetite to recover from its recent slump. Asian equity indices are now trading in positive territory, with the Nikkei +2.0%, Hang Seng +1.5% and Shanghai Composite + 1.3%.
This morning’s BoJ monetary policy meeting yielded no change in interest rates (which currently stand at 0.00-0.10%), with the central bank asserting the economy will resume a moderate recovery. Meanwhile, Japan’s new Finance Minister Azumi has continued the active verbal rhetoric favoured by his predecessor; he was on the wires this morning repeating that policymakers are eyeing speculative moves in the FX market with interest, and that JPY strength is putting a strain on the Japanese economy. More interesting, was his comment that he was monitoring markets to seek an appropriate JPY rate; a remark made more notable by the SNB’s introduction of a EURCHF peg at 1.2000 yesterday morning. Thus far we have had no reason to believe that Japan will implement a similar peg for USDJPY, but clearly the problem of JPY appreciation has persisted for long enough and guerrilla intervention has been unsuccessful enough that more formal options may be being considered. We still think the cost of a USDJPY peg would be prohibitive, but keep an open mind as to what other steps the BoJ and Ministry of Finance may take next.
CNN reports today that President Obama will unveil a $300bn jobs package in his address to Congress tomorrow – a move that would come as welcome relief to an economy reeling from Friday’s poor non-farm payrolls on Friday (no jobs added in August compared to 68k estimated).
Coming up today we have both the Swedish and Canadian central banks making their latest interest rate announcements. Both the Riksbank and BoC are expected to keep rates unchanged at 2.00% and 1.00% respectively.
By
M.Zohaib Gadit
Forex Trading Consultant
This morning’s BoJ monetary policy meeting yielded no change in interest rates (which currently stand at 0.00-0.10%), with the central bank asserting the economy will resume a moderate recovery. Meanwhile, Japan’s new Finance Minister Azumi has continued the active verbal rhetoric favoured by his predecessor; he was on the wires this morning repeating that policymakers are eyeing speculative moves in the FX market with interest, and that JPY strength is putting a strain on the Japanese economy. More interesting, was his comment that he was monitoring markets to seek an appropriate JPY rate; a remark made more notable by the SNB’s introduction of a EURCHF peg at 1.2000 yesterday morning. Thus far we have had no reason to believe that Japan will implement a similar peg for USDJPY, but clearly the problem of JPY appreciation has persisted for long enough and guerrilla intervention has been unsuccessful enough that more formal options may be being considered. We still think the cost of a USDJPY peg would be prohibitive, but keep an open mind as to what other steps the BoJ and Ministry of Finance may take next.
CNN reports today that President Obama will unveil a $300bn jobs package in his address to Congress tomorrow – a move that would come as welcome relief to an economy reeling from Friday’s poor non-farm payrolls on Friday (no jobs added in August compared to 68k estimated).
Coming up today we have both the Swedish and Canadian central banks making their latest interest rate announcements. Both the Riksbank and BoC are expected to keep rates unchanged at 2.00% and 1.00% respectively.
By
M.Zohaib Gadit
Forex Trading Consultant
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