- BOJ cuts overnight call rate target to 0-0.1% vs previous 0.1%. Will keep zero rates until prices seen stabilising. To create fund to buy JGB’s, other assets. Size of pool of funds likely to be around 5 trln yen
- BOJ’s Shirakawa: May expand asset buying pool fund from 5 trln yen if need arises in the future
- Japan FinMin Noda: Will take firm measures on fx when needed
- EU’s Rehn says China and EU agree to work to rebalance global growth
- Talk Bank of Korea bought dollars around KRW 1,131 – Traders
- Euro zone September final services PMI revised up to 54.1 from flash 53.6. Still down from 55.9 read in August and a 6-month low
- Euro zone August retail sales -0.4% m/m, +0.6% y/y, weaker than median forecasts +0.2%, +1.4% respectively
- UK September services PMI rises to 52.8 from 51.3 in August, demonstrably stronger than median forecast 51.0
- Moody’s puts Ireland on review for possible downgrade
- Moody’s changes outlook on Turkey’s ratings to positive from stable
Good morning for euro, which has seen across the board gains. EUR/USD up at 1.3775 from early 1.3660; EUR/JPY up at 114.90 from early 114.05 and EUR/CHF up at 1.3330 from early 1.3280.
EUR/USD was on the move early, rising back above 1.3700 amid talk of Asian sovereign buying. The pairing got as high as 1.3721 initially before stalling out, talk circulating that the BIS had sold around 1.3720.
That seemed as though that might be it for the morning. Stops were reported through 1.3725 and 1.3740 and they looked like they might remain intact ahead of North America’s entry to the market. It wasn’t to be the case. A large US commercial bank stepped in buying aggressively (said to be around a yard) and helped trip the stops in quick succession.
A US investment bank was also seen an aggressive buyer around this time and we quickly made it to session high 1.3794 before steadying. We sit presently at 1.3775. There is talk of 1.3825 barrier option interest.
USD/JPY sits at 83.40 having been as high as 83.98 and as low as 83.25 this morning. The pairing rallied in the wake of the news that the BOJ had decided on further monetary easing. Unfortunately for the USD/JPY bulls they couldn’t penetrate Japanese exporter sell orders at 83.90/00 and we saw a quick about turn.
We got as low as 83.25 before steadying. Talk in the market is of Japanese investor buy orders starting at 83.25 and lined up lower. Not quite sure how much lower they go though.
Cable up at 1.5875 from early 1.5815 having been briefly above 1.5900 to session high 1.5913. UK services PMI was a nice surprise (see above) lending the pairing some underpinning. EUR/GBP up at .8675 from early .8635 reflecting euro’s general strength.
