The BOJ defied the market and kept policy unchanged. The market had expected further action designed to slow their quantitative bond buying. That has led to the JPY as the weakest of the major currencies. The CHF is the strongest.
The USDJPY rose close to 350 pips in the 2 or so hours after the decision as traders scrambled to cover shorts in the pair. However, over the last 7-8 hours the pair has retraced around 278 pips to retest the broken 100 hour MA at 128.78 (see blue line in the chart below). That MA stalled the fall. The price action is indicative of a market that seems intent to force the BOJs hand if not sooner, than later.
Traders will be watching the 129.497 level for intraday clues now. That level was the swing low from January 3. The 38.2% of the move down from the high last week comes in just below that at 129.37. Move above, and the buyers are more in control marginally given the bounce off the 100 hour MA. Conversely, move back below the 100 hour MA, and the sellers are back in full control.
US stocks in pre-market trading are higher. The Nasdaq is up for 7 straight days after a modest rise yesterday. The S&P is higher and remains above its 200 day MA at 3978.
The GBPUSD moved higher as inflation remains elevated and over 10% at 10.5% (it is down from 10.7% last month but is not coming down yet). The Core YoY remained unchanged at 6.3%
US yields are lower with the long end down the most.
Today retail sales are expected to show a decline of -0.8% which would be the 2nd decline in a row (fell -0.6% last month). PPI inflation numbers will also be released today with expectations of -0.1%. The YoY is expected to remain elevated at 6.8% but that is down from 7.4% last month. If it comes in as expected, the last 6 months MoM gains would cumulate to +0.2% giving traders hope that pipeline inflation is on it's way to reversing the supply chain and war surges.
IN other markets:
- Spot gold is up $9.45 or 0.50% at $1917.77
- Spot silver up $0.28 or 1.12% at $24.21
- Crude oil trading at $82.09. That is up $1.90 on the day
- Bitcoin is trading at $21,280. The 5 PM level yesterday was around $21,310
In the premarket for US stocks, the major indices are marginally higher. The NASDAQ index is on a 7-day win streak. The S&P and Dow Industrial Average both felt yesterday snapping four day winning streak
- Dow Industrial Average up 51 points after yesterday's -391.76 point decline
- S&P index up 11 points after yesterday's -8.10 point decline
- NASDAQ index - up 42 points after yesterday's 15.96 point rise
the European equity markets, the major indices are marginally lower/unchanged:
- German DAX +0.16%
- Francis CAC, +0.33%
- UK's FTSE 100 +0.06%
- Spain's Ibex +0.88%
- Italy's FTSE MIB +0.48%
In the US debt market, the US yield curve is steeper:
In the European debt market, the yields are lower in the benchmark 10 year sector as investors gear for slower growth. Yesterday, an ECB source post came out saying the ECB was leaning toward more modest tightenings after a likely 50 bp hike at the next meeting.
