Headlines:
- BOJ raises policy rate to 0.25% in July monetary policy meeting
- BOJ governor Ueda: Weak yen was not necessarily the biggest reason for rate hike
- BOJ governor Ueda says does not have 0.50% policy rate in mind as a ceiling
- BOJ governor Ueda: Hard to tell when the next rate hike may be
- USD/JPY extends fall as downside break eyed
- USD/JPY Technical Analysis – The pair cracked through the key 152.00 handle
- Eurozone July preliminary CPI +2.6% vs +2.5% y/y expected
- Italy July preliminary CPI +1.3% vs +1.2% y/y expected
- France July preliminary CPI +2.3% vs +2.4% y/y expected
- Germany July unemployment change 18k vs 15k expected
- Germany June import price index +0.4% vs +0.1% m/m expected
- Switzerland July UBS investor sentiment 9.4 vs 17.5 prior
- Plenty for markets to look out for as July trading winds down
Markets:
- JPY leads, AUD lags on the day
- European equities higher; S&P 500 futures up 0.9%
- US 10-year yields down 0.5 bps to 4.135%
- Gold up 0.5% to $2,420.53
- WTI crude up 3.2% to $76.27
- Bitcoin down 0.1% to $66,095
The BOJ certainly took their time with their decision but it was no secret after the leak yesterday already. They moved to raise the policy rate by 15 bps to 0.25% while announcing a slow and gradual taper to their bond purchases.
The yen whipsawed on the initial decision, with USD/JPY jumping down to 151.60 before moving back up to touch 153.88. The 100-hour moving average at 153.67 held at the time, keeping price action around 153.00-30 mostly. That was until BOJ governor Ueda's press conference, before the yen gained further in a push all the way down to 150.04 and is holding near the lows currently.
Besides that, the action in major currencies were not too eventful. EUR/USD is up 0.2% to 1.0830 levels but nothing outstanding. GBP/USD is flat at 1.2835 and USD/CHF down 0.3% to 0.8800 on the day.
The aussie is the laggard following a softer Q2 CPI report, with AUD/USD keeping lower by 0.5% near 0.6500 currently.
In the equities space, stocks are staying buoyed ahead of month-end with S&P 500 futures racing up to near 1% gains as tech shares look to bounce back strongly. European indices are also looking to wrap up the month on a positive note with French stocks leading the charge.
It's now over to the dollar side of the equation and the Treasury market to respond to the US ADP employment data and the Fed later in the day. Yields are in a cycle of lower highs, lower lows so that is something to be mindful of as we look to August trading.
