The BOJ disappointed markets overnight by announcing that it would take action but not to the extent it had originally stated, in fact Gov Kuroda stated that a total of 6 trl Yen will be pumped into the economy, a far cry from the original 20-30 he touted. Subsequently the JPY strengthened across the board, dragging the AUD and NZD with it as the region prepares for less stimulus from one of the regions giants.
This weeks FED meeting will be the major news event for the week as the Fed releases the FOMC statement Federal Funds Rate which is expected to remain unchanged at <0.5%, but until then we have two key data releases from the US, in the form of the CB Consumer Confidence ( expected at 95.6) and the New Home Sales releases expected at 560K. Markets will be looking to these releases as clues as to how the US economy is doing, and better than expected results will see the USD firm across the board as markets further price in a potential FED hike this year. Worse than expected data will result in sentiment souring as the reality of a global slow down sets in.
Overnight we will see key CPI data out of Australia, which markets will be watching to gauge the health of the AUS economy and whether, by the RBA`s admissions, the AUD is truly overvalued. Worse than expected CPI q/q data (expected at 0.4%), will result in a sell off of the AUD across the board as bears recapture 0.7500 and beyond. Better than expected data will see the AUD continue its medium term bullish trend as we see 0.7600 and beyond recaptured by hungry bulls.