Bank of Japan reaction:
- The BOJ underdelivers once again
- BOJ governor Ueda: Will patiently continue monetary easing with decided new measures
- Ueda: Don't think long-term rates will come under pressure to exceed 1%
- Ueda: Next spring's wage negotiations will be an important factor
- Japan did not spend on FX intervention in the four weeks to 27 October
- EUR/JPY on the move, climbs to highest level since 2008
- Japanese yen falls further as Tokyo seen on the sidelines
Other headlines:
- Treasury yields fall further ahead of the main event tomorrow
- Eurozone October preliminary CPI +2.9% vs +3.1% y/y expected
- France October preliminary CPI +4.0% vs +4.0% y/y expected
- Eurozone Q3 preliminary GDP -0.1% vs 0.0% q/q expected
- France Q3 preliminary GDP +0.1% vs +0.1% q/q expected
- Italy Q3 preliminary GDP 0.0% vs +0.1% q/q expected
- Germany September retail sales -0.8% vs +0.5% m/m expected
- Germany September import price index +1.6% vs +0.7% m/m expected
Markets:
- EUR leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.3%
- US 10-year yields down 4.4 bps to 4.832%
- Gold up 0.1% to $1,998.93
- WTI crude up 0.6% to $82.85
- Bitcoin up 0.3% to $34,525
The spotlight today is on the Japanese yen as it capitulated following a less hawkish than expected BOJ earlier in the day.
The central bank made a minor tweak on its yield curve control policy but markets were expecting more, as BOJ governor Ueda then delivered rather dovish remarks in the aftermath. USD/JPY nudged up to 150.00 at the end of Asia trading before extending higher to 150.40 at the start of European trading.
Then, we got confirmation by Tokyo that they didn't spend a dime in intervening in the FX market during the month. That is a sort of green light and took the yen even lower on the session, with USD/JPY moving up to 150.75.
The dollar isn't the best gauge of the yen's plight though, as the greenback itself is slightly softer amid a push lower in Treasury yields. The bond market is a focus point ahead of the Treasury refunding tomorrow, which I would argue is the main event in the day ahead - not the Fed.
Instead, it was the euro that is shining the brightest as we saw softer inflation figures and a sluggish picture in the economy in Q3. The single currency gained traction as equities also reversed losses on the day. EUR/USD moved up from around 1.0600 to 1.0670 before holding just under that for now.
EUR/JPY is the standout as it breaks above the 160.00 mark to 160.50 levels currently - its highest since August 2008.
Other than that, the rest of the major currencies bloc remain more muted although commodity currencies have recovered a bit of ground against the dollar after a slower start.
That comes as stocks also rebounded with S&P 500 futures now up 0.3%, after having been down 0.3% earlier in the day. Month-end flows will be a consideration, so just be wary of that in the session ahead.