ASIA

Asian markets traded mixed overnight after stronger crude prices and a shaky Wall Street. The ASX managed to finish up 0.6% while the Nikkei 225 managed a slight uptick to finish up 0.2% in indecisive trading in light of the upcoming BOJ policy decision tomorrow. Chinas Shanghai composite continued its weakness closing down 0.8%, helped off its lows by the PBOC injecting further liquidity into the inter-bank markets.

Tonight’s session is dominated by news out of Japan, which sees a host of releases in the form of Household Spending (expected at -2.3%), Tokyo Core CPI y/y (expected at 0.1%) and also the BOJ Monetary Policy statement, BOJ Outlook Report and BOJ Press conference coming through; investors will be looking towards comments regarding the current state of the economy and the BOJ opinion of the e effectiveness of its current monetary policy and whether further action will be taken. A more dovish tone will see the JPY weaken across the board as markets begin pricing in more easing a process already begun last week after the BOJ announced that further intervention in the currency markets is still on the card. Should the BOJ change to a hawkish tone, we would see the JPY gain heavily across the board as the already dovish adjustments are unwound and fresh money look to push the JPY higher.

UNITED STATES

The FOMC left rate unchanged as expected via a unanimous vote and had little to say about the current outlook and assessment of the economy and the effect of the current monetary policy. They did however state that further hikes would be gradual in nature and where sure to not dismiss a MARCH increase as they monitor global economic and financial factors along with the jobs market, in which they see slack being taken in as the market stabilizes.

Overall the FOMC was cautious in its statement and left for slightly dovish market sentiment which did not lead to any sustainable moves in the USD, which after initial weakness was reigned in across the board to finish flat at post FOMC levels. Indices, who appear to have priced in a more dovish FOMC, saw losses across the board which was also largely due to disappointing earnings forecast from many of the large players. The DJIA finishing down 1.38%, the S&P500 finished down 1.09% and the NASDAQ 100 finished down 2.48%.

Today sees data in the form of:

  • Core Durable Goods Orders m/m expected at -0.1%
  • Unemployment Claims expected at 281k
  • Durable Goods Orders m/m expected at -0.6%
  • Pending Home Sales m/m expected at 1%

CRUDE OIL

US Crude Oil Inventories came in higher than expected at 8383k vs 4000k which saw crude buck the trend and trade up a dollar to $33 after the US announced that production had fallen 0.152% w/w, showing a slowdown in supply which will see inventories come off next week. This trend is expected to be followed by other oil producers who will begin to feel the pinch of the low prices. However, Prices are expected to remain subdued as Opec members refuse to budge on current output. The game of chicken is expected to continue as the war for larger market share deepens.