All eyes on the BOJ

The market was eagerly awaiting Bernanke’s opening speech at the 2012 Financial Markets Conference which failed to produce any market moving comments. The Fed Chairman didn’t comment on the market, or current labour or inflation conditions. Instead, he focused on shadow banking and other topics the market doesn’t particularly care about. Investors seemingly only want to hear one thing from the Fed, is more QE coming or not. Hence, the market was nervously watching the Q&A session following Bernanke’s speech for any indication of more QE, but the wait proved to be in vain.

Market focus will now shift to the BOJ’s policy decision later today. The bank is widely expected to keep monetary policy steady, waiting until a more thorough assessment of the economy later this month before deciding on the best course of action. Yet, there is a slim chance the BOJ may debate action if BOJ member Miyao repeats his proposal to boost asset purchases and can change the mind of other members who appear to be waiting until the February 27 meeting before easing policy. The bank has numerous options, including an extension of the asset purchase program (APP), expanding the APP, a removal of a self-imposed guideline that currently limits JGB purchases and/or an upward revision in the inflation goal from 1% to 2%.

Before the BOJ decision we are expecting business confidence and job advertisements numbers out of Australia. Neither is widely expected to move the market, or the Aussie for that matter, but will provide an insight into the health of Australia’s labour market and business conditions. Both indicators softened a little recently, and a further decline in business confidence and/or job advertisements would add to the case for a rate cut next month from the RBA.

Friday’s poor NFP figures are weighing on the ASX 200, which is currently down by around 0.94%. The Nikkei, however, did not have the same Easter break as the Australian market, and therefore has had time recover from the poor data out of the US. Hence, the Nikkei 225 is in the green by around 0.44%.

Источник: Forex.com

09.04.2012