Yen Dips, Nikkei Jumps As BOJ Revamps Stimulus Program
ActionForex | Sep 21, 2016 05:08AM ET
The Japanese Yen dips broadly after BoJ kept policy rate at -0.1% but revamped the framework of the stimulus program as a comprehensive review. The central bank introduced a new term "QQE with Yield Curve Control". BoJ will control short-term interest rate with -0.1% negative interest rate. Meanwhile, long-term interest rate will be controlled by the asset purchase, maintained at JPY 80T annually. Meanwhile, BoJ left open options for additional easing with firstly, cutting of short-term interest rate and secondly, adjusting the target level of a long-term interest rate. Expansion of asset purchases and acceleration of the pace would also be considered. Nikkei responses well to the announcement and is trading up 1.4% at the time of writing. Meanwhile, yen is under mild selling pressure.
FOMC rate decision will be the next major focus of the markets. Fed is widely expected to stand pat and keep the target range of federal funds rate at 0.25-0.50%. Nonetheless, there are a couple of things to watch that could move markets. Firstly, all traders will be looking for signal of a December rate hike. Judging from recent comments from FOMC members, the majority is expecting another hike this year. Fed fund futures are also pricing in nearly 60% chance of December hike. Fed chair Yellen might make use of the press conference to affirm such expectations. Secondly, Fed will be releasing updated economic projections. Attention will without a doubt be on the so called "dot plot" which indicates policy makers' view on rate path. Thirdly, the updated forecasts on inflation, growth and unemployment will be scrutinized for the consistency with the dot plot.
DJIA is struggling in tight range after dipping to 17992.21. We're holding on to the view that a short term top is at least formed at 18668.43 and correction from there isn't completed yet. This view is supported by the sustained trading below 55 days EMA. A break of 17992.21 will extend the fall to 38.2% of 15450.56 to 18688.43 at 17439.20. The key level to watch is indeed 17063.08 and firm break there will raise the chance of medium term correction through 15450.56.
Elsewhere, Australia Westpac leading index rose 0.0% mom in August. UK public sector net borrowing, Canada wholesale sales and US crude oil inventories will be released later today.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.