JAPAN

The bank of Japan kept the annual increase in the monetary base steady at 80 trl Yen but adopted a negative interest rate of -0.10%, which it stated it could and would cut rates further if needed and pushed back the time it would require to achieve the inflation target it set. The votes to maintain the monetary base was 8-1 to maintain while the votes to cut rates was split 5-4 in favour. The aggressive stimulus out of japan reverberated through the markets as the JPY weakened across the board with the USDJPY popping the 120.40 level and the Nikkei posting 4% gains on the expected inflationary effects but this was reigned in on the BOJ pushing back the time table for the inflation target as it suggests a less aggressive stimulus will be needed in the future. The Nikkei finished up 2.8% while the USDJPY is now trading at 120.50 after retesting 119.20 from the highs.

UNITED STATES

US equities finished firmly in the green with the turnaround in oil leading the way as energy giants see some respite to their crushed share prices. The DJIA closed up 0.79%, the S&P 500 finished up 0.55% and the NASDAQ-100 finished up 1.39%.

Data out of the US did little to help the Dollar after worse than expected numbers on Pending home Sales (0.1% Vs 0.9%), Durable Goods Orders (-5.10% Vs -0.5%) and Continuing Claims (2268k Vs 2218k) dominated the US session despite slightly better than expected Initial Jobless Claims ( 278k Vs 281K).

Today`s US session will be another telling one with volatility expected on the back of key data being released:

  • Advanced GDP q/q expected at 0.8%
  • Advanced GDP Price Index q/q expected at 1.2%
  • Employment Cost Index q/q expected at 0.6%
  • Goods Trade Balance expected at -60.0B
  • Chicago PMI expected at 45.4
  • Revised UoM Consumer Sentiment expected at 45.4

EURO ZONE

ECB`s Weidmann stated that Euro-area inflation may dip into negative territory during the next few months and warned that a further increase in the volume of ECB bond purchases might risk breaking ECB laws by leading to bond purchases directly from states. EU economic Confidence printed worse than expected but market were not too phased after Germany CPI y/y posted a surprise increase of 0.5% vs the expect 0.4%, and traded higher through the day.

Today’s data out of the Euro Zone promises to keep traders on their toes with the following:

  • Spanish Flash CPI y/y expected at 0.1%
  • Spanish Flash GDP q/q expected at 0.8%
  • EURO M3 Money Supply expected at 5.2%
  • EURO CPI Flash Estimate y/y expected at 0.4%
  • EURO Core CPI Flash Estimate y/y expected at 0.9%

CANADA

The Canadian economy has found some respite after crude traded through the $35 market and the Loonie is enjoying a well-deserved retrace. Today’s data, if better than expect, will add to this current run. The data expected today is as follows:​

  • GDP m/m expected at 0.3%
  • RMPI m/m -3.8%

CRUDE OIL

The current climb in crude oil seems to be a classic case of buy the rumour and sell the fact, only time will tell. The rumour is that Russia and OPEC members are trying to establish a meeting between themselves to discuss a cut in global oil supply. Russia has reported that Saudi Arabia made a proposal that all producing member should cut output by 5%. This was however disputed by OPEC delegates who said Saudi Arabia said no such thing. OPEC did however say that they are open to negotiations with oil producers in the light of the current oversupply. The game of chicken is expected to continue with any jaw boning expected to cause volatility going into the weekend.