Category: Daily Look

BOJ increased stimulus



The initial dollar strength following the FOMC on Wednesday was partially unwound as it looked like the bull run was struggling to shift up a gear. If there was ever any doubt in the mind of the dollar bulls it will have been laid to rest earlier this morning by the Bank of Japan who unexpectedly increased monetary stimulus taking almost everyone by surprise, not because further measures were not expected, but because it was thought the BOJ wouldn’t move quite so soon. USDJPY has not only smashed through 110.00, but beyond and now trading above 111.00 at 111.20, an almost seven year high.

The move by the BOJ was not only unexpected, but shows the divergence between the major Central Banks around the globe as the Federal Reserve has just ended monetary stimulus and the BOJ is speeding up the printing presses. USDJPY broke out of its multi-year downward trend back in September and this move today only confirms the end of that trend.

We will also focus on Eurozone CPI data out today where CPI is due to lift a little. Yesterday slightly better than expected economic sentiment data was widely welcomed and put a stop to the EURUSD move lower so this morning we will see if 1.2550 can hold over the release of the CPI figures. There is great debate over the state of the Eurozone as Germany drags its feet whilst the laggards such as Portugal, Spain and even Greece are showing tentative signs of improvement.

Further reading:

Next Leg Of USD Strength Is Just Around The Corner – Citi

EUR/USD erases recovery – 5 reasons

USD edgy after FOMC decision

USD edgy after FOMC decision

The FOMC decision last night gave us the expected historic end to QE III which really should have come as no surprise however the dollar reacted as if it was. Relatively hawkish comments about the labour market caused USD to spike strongly as the market readjusted for the next move from the Fed, which is

FOMC decision day

FOMC decision day

The dollar strength seen in August and September has come up against some stiff resistance in October and even yesterday’s much better than expected US consumer confidence numbers were not enough to attract dollar buyers, whilst the data did lead to further risk appetite for to indices with the Dow closing back above the 17,000

The Fed expexted to end QE

The Fed expexted to end QE

The dollar has failed to re-establish itself as the dominant currency following a retracement so far in October and yesterday’s economic data didn’t do too much to help it as PMI surveys were released lower than expected. Even though the Federal Reserve is expected to end QE III this week the market’s recognised that interest

Eurozone bankers relieved

Eurozone bankers relieved

The ECB’s stress tests have passed and it looks like third time lucky for the European banking sector although the focus is on Italy which has seen as many as nine fail. The euro managed to regain the 1.2700 level over night and is just below there at the time of writing trading at 1.2690

U.S. Dollar Mixed After Higher Jobless Claims and NY Ebola Case

U.S. Dollar Mixed After Higher Jobless Claims and NY Ebola Case

The U.S. Department of Labor reported that Weekly Initial Jobless Claims had increased by 17,000 claims in the week ending on October 18th. Weekly jobless claims rose to 283K, compared to an expected decline to 269K and with the previous number revised slight higher from 264K to 266K. The four week average for jobless claims

Markets await UK growth data

Markets await UK growth data

There’s no doubt that a calmer tone has emerged in markets this year. Stocks have recovered for most of the week and the spike higher in forward volatility measures seen in both FX and even more so in equities have been partially reversed. This has also allowed the dollar to recover from the mid-October lows

Growing concerns over global growth

Growing concerns over global growth

There has been a common theme in the past few weeks in relation to central banks becoming more concerned with the global growth outlook and the Eurozone in particular. This was evident in the minutes to the UK MPC meeting released yesterday, together with RBA minutes earlier in the week and also the FOMC minutes

Daily CADJPY Indecision Candle – Potential Breakout to the Downside

Daily CADJPY Indecision Candle – Potential Breakout to the Downside

The CADJPY market has been falling under pressure every since the prior uptrend over extended, and was exhausted. The CADJPY has fallen into a strong weekly level where the market found strong support. The daily chart printed a bullish rejection candle and pushed prices higher in what appears to be a correctional move. The countertrend

EUR/USD and GBP/USD pressured lower

EUR/USD and GBP/USD pressured lower

The main move on Tuesday was the decline seen in EURUSD, which saw the week’s short-held gains put aside as the market reacted to fresh speculation of stimulus from the ECB. The central bank bought covered bonds for a second day in a row as part of measures announced back in September. There were also