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The Bank of Japan met overnight and while maintaining there resolve to double the monetary base, they did not add any additional stimulus. There were some dealers who expected further easing measures and when that did not come to pass, the USD/JPY was sold off.

The currency pair reached a low of 98.22 in overnight trading before moving back to the 98.70 level. Adding to the surprise that there was no further stimulus was the BOJ policy statement. Two sentences. That was it!! It stated that the decision was unanimous, and pledged to expand the monetary base.

After the last meeting where the BOJ added stimulus, this statement pretty much put aside the thought that USD/JPY would make a move towards 100.00 in the near future. Traders liquidated “long” USD/JPY positions. Japan is closed on Monday.

Commodity currencies strengthened as the AUD and CAD made headway against the USD. AUD moved higher as traders are expecting that stimulus moves by central banks will put money into the nation’s higher yielding assets.

According to analysts, the moves by the FED, Bank of England, BOJ and even the ECB, regarding easing measures make Australia an attractive destination. As one analyst said. “the money has to go somewhere”. AUD tested resistance at 1.0340 overnight before easing off, but remains well supported at the 1.0280 and 1.0260 levels.

The Canadian Dollar strengthened against the USD as crude oil, which is Canada’s largest export, moved higher yesterday. Adding to the support for the Canadian Dollar was good economic news from the US as initial claims fell. The Canadian and US economies are very much linked and good news in the US tends to help Canada and support the currency.

USD/CAD broke through support at 1.0210 yesterday to trade below the psychological 1.0200 level testing support at 1.0180. Crude oil futures rose 2% yesterday, reaching their highest level in 2 weeks. Expect another move towards the 1.0180 level in USD/CAD with added support at 1.0160. Resistance is seen at 1.0225.

The EUR has remained on its roller coaster ride, one moment looking extremely offered, the next very well bid. The overnight range saw the single currency test resistance at 1.3050 and support at 1.2990.

Speculation remains as to whether or not the ECB will lower rates at their meeting next week. Economic data in Europe continues to disappoint and lowering rates may not be the answer. The ECB has resisted using any monetary easing tactics as their central bank brethren have and analysts don’t expect that to happen anytime soon.

As we head into the North American trading day, US release of first quarter GDP will be the main news item. It is expected to grow 3% annualized. The 3% growth is much stronger than the fourth quarter 0.4%. This release, if accurate, will once again open the door for discussion as to when the FED will begin to scale back the quantitative easing policy.

See how to trade the US GDP with USD/JPY

Range trading should be the order of the day today. I expect the currencies to remain within their overnight ranges.