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The BOJ likely to offer the first rate surprise

Daily Briefing, April 25 – BOJ Leaves Policy Steady, Core Durable Goods Orders Up Next

Posted Thursday, April 25, 2019 by
Arslan Butt • 2 min read

Good morning, fellas.

The Bank of Japan kept the policy rate unchanged at -0.10%, keeping the policy stance dovish. Here are the key highlights of the report:

  • The Bank will apply a negative interest rate of minus 0.1% to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
  • Concerning asset purchases other than JGB (Japan Government Bonds) purchases, the Bank decided, by a unanimous vote. Bank will maintain their amounts outstanding at about 2.2 trillion Yen and about 3.2 trillion Yen, respectively.

The Japanese Yen strengthened, and many are wondering what triggered buying in the JPY. Well, there was nothing new in the policy as BOJ maintained the same old dovish stance as they were keeping before. Considering the global economic slowdown and geopolitical tensions and trade war, the market was expecting Bank of Japan to follow its peers and come up with something more dovish. However, the BOJ failed to surprise the market. As a result, investors triggered the demand for Japanese yen.

What’s Next on the Docket?

Spanish Unemployment Rate
The National Statistics Institute is due to release the data at 7:00 GMT with a forecast of 14.5%. While the Spanish unemployment rate was 14.5% in January. I hope it gives some hope to the Eurozone economy.

By the way, the figure is released quarterly, about 85 days after the quarter ends. Which is why it’s generally viewed as a lagging indicator. The number of unemployed people is an essential signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

US Core Durable Goods Orders
It’s an economic indicator that measures the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. The orders are expected to gain by 0.2% which is higher than the -0.1% gain in March 2019.

Over the past seven months, the core durable goods orders figure has been crappy, always staying below 0.2% growth. However, economists are finally expecting a crossover today.

US Unemployment Claims
Claims are due at 12:30 GMT with a negative forecast of 199K vs. 192K. Lately, the unemployment claims are not driving many fluctuations in the market, and I’m expecting similar behavior today.

Looks like another volatile day, so good luck and stay tuned to FX Leaders for exciting forex trading signals!

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