Monday, January 30 is the day in which begins a two-day meeting of the Bank of Japan, which will end with tomorrow’s publication of the Bank’s decision on the level of Japanese interest rates and a statement which will contain a summary of the current policy of BoJ as well as the macroeconomic forecasts for the coming months. The market slowly comes to life, and we check what today may affect the valuation of individual currencies. Welcome to the morning market overview!
There was not much data during the Asian session – remember the beginning of lunar new year, which means that countries such as, China and South Korea celebrate. Ten minutes before 1:00 am we met the latest December data on changes in the level of retail sales in Japan. The report turned out to be significantly worse than market forecasts, and the rate of retail sales amounted to only 0.6% against the expected 1.3%.
More than on macroeconomic data, investors are focused on the statements of most important persons of both the European and Asian policy. Staying in the area of Japan, you cannot fail to recall the words of the Japanese finance minister – Taro Aso. He pointed out that the Japanese government expects the BoJ to continue efforts to improve the level of inflation in the country, as well as care for the condition of the economy in general. By some commentators, this part of the Aso speech sounded like an attempt to shift the blame for the inadequate growth of macroeconomic indicators on the Bank of Japan.
Later in his speech, Aso assured that the government does not consider the idea of perpetual bond issue. Japanese Finance Minister also stressed that he personally has for the current governor of the BoJ great confidence and well-evaluates its activities within the limits of monetary policy. Although to the end of the term of Haruhiko Kuroda there are still more than 15 months (until April 2018), Aso today said that he hopes that the successor of the current governor of the BoJ will continue current policy of the Bank.
Bank itself, initially optimistic about the future actions of President Trump is now starting to have doubts whether Trumponomics serve the global economy. The concerns are mainly about possible isolation of the United States in terms of foreign trade. We realized how surprisingly little we know about Donald Trump – he said in an interview with reporters WSJ employee BoJ.
Political issues negatively affect the valuation of the dollar in the market. Greenback lost to most of the major currencies, USD/JPY opened with a a bearish gap, created as if in response to the resistance zone in the region of 115.30:
What it is worth paying attention to?
Today’s macroeconomic calendar will be rather calm. Mainly will attract the attention of investors publications scheduled for this afternoon. Already at 14:00 we will know the preliminary calculations of the German CPI and HICP for January of this year. Forecasts say the indicator up to 2% increase in the level of consumer inflation year on year.
About 14:30 we will focus on data from the United States – then we will know report on the monthly change in spending and personal income of average Smith, plus a base index of PCE.
On 16:00 is scheduled probably the most important publication of the day – the US report on the ongoing sale of houses. The December index of pending home sales, according to forecasts should be as high as 1.1%.
