Forex news for Asia trading Friday 29 January 2016

Japan today - Bank of Japan decision

  • Japanese stocks turn negative - huge plunge
  • The 'key points' of today's big impact BOJ announcement
  • BOJ announce adopts negative rates policy
  • Still waiting on the BOJ announcement. We only KNOW one thing so far
  • Nikkei says BOJ discusses negative interest rates
  • What time is the BOJ announcement expected (it should be soon)
  • BOJ announcement due soon: BNP see likelihood of further easing close to 50%
  • Comments from Japan - Aso, Suga & new guy Ishihara on the economy, BOJ
  • Japan govt official: Prices rising as a trend when strip away energy price falls
  • Japan data: (prelim) December Industrial Production -1.4% m/m (expected -0.3%)
  • Japan data: Overall Household Spending -4.4%, Jobless Rate 3.3%, Job-To-Applicant Ratio 1.27
  • Japan data - Headline national CPI (December): 0.2% y/y (vs. expected 0.2%)
  • Japan press - BOJ debate on global uncertainty, inflation - warrants more stimulus?
  • BOJ meeting today - changed schedule for 2016 & preview
  • Fitch says positive trend for China homebuilders to stall in 2016
  • RBA first meeting for 2016 is on Tuesday - expected to remain on hold
  • China Pre-market indications show the Shanghai Composite to open -0.1%
  • PBOC sets USD/CNY mid-point today at 6.5516
  • PBOC OMO today: To inject 100 bn yuan today
  • Australian Treasurer Morrison: AAA rating not at risk
  • Heads up for PBOC open market operations TODAY!
  • Apple issues worldwide charger AC wall plug adaptor recall
  • Australia: Q4 PPI +0.3% q/q (prior 0.9%), Private sector credit 0.5% m/m (expected 0.6%)
  • UK: GfK Consumer Confidence: 4 (expected 1). Lloyds business barometer: 45 (prior 45)
  • German fin min monthly report: Leading indicators suggest eco recovery
  • Trade ideas thread for Friday 29 January 2016
  • Forecasts for EUR/USD, USD/JPY and more from ABN Amro
  • NZ Building permit (consents) (December): +2.3% m/m (prior +1.8%)
  • Australian PM Turnbull: Government debt is too high
  • Australia press: Australian PM warned on risks to AAA credit rating

You'd think it would have been a day of little activity awaiting the Bank of Japan monetary policy decision. But there was activity, especially in the yen.

From Japan in the morning we got another poor round of data, with a big slump on 'Overall household Spending' in December, a slump also in December Industrial Production and yet another disappointing round of official inflation data.

USD/JPY started trading higher after the inflation data release, and the later IP data, testing towards 119.00. The level was firmly rejected, with a near 50 point slide over the following hour.

AUD and NZD, too, had some action, both up a little against the USD, AUD outperformed.

The PBOC injected funds into the money market through their OMO today, a total of 100bn yuan. The yuan fix was barely changed (again).

And then the wait for the BOJ began.

We've come to expect the BOJ announcement between around 0230GMT to 0330GMT, and as this time window passed a clue was given that perhaps a policy change was afoot (the reasoning going that the later an announcement is, it more likely means more discussion is taking place, and this discussion is likely policy change discussion ... and no, this isn't hindsight, if you track what was posted through the session you can track this along).

USD/JPY (and yen crosses ... I'll just refer to the USD/JPY from here on) initially spiked as Bloomberg carried a headline the Nikkei was reporting the BOJ had discussed negative rates.

A few minutes later the news hit on the actual decision: BOJ announce adopts negative rates policy

The price response was swift, USD/JPY soared above 121 (121.40 or so), and stocks in Japan surged too.

The upmoves were not sustained, though, USD/JPY came back to the low 119's, and the Nikkei225 made a fresh session low.

Elsewhere we saw a spike move higher in USD/CHF (to around 1.0220+), EUR/USD under 1.0890. EUR/JPY to around 132.30 highs.

AUD and NZD were subdued, they each had a wiggle but the moves were small. Crosses against the yen, of course, showed huge moves (that was USD/JPY related)

As I update some price stability has returned.

Gold dipped under 1110 and is now back around 1114.

Oil took a breather today after the wild moves overnight.

Regional equities:

  • Nikkei +1.38%
  • Shanghai +2.00%
  • HK +1.82%
  • ASX +0.14%

USD/JPY as I post: