Here’s today’s ‘Just A Minute’ bringing you a 60 second summary what’s happening in the markets today:
Main Trading Events Of The Day: BOJ Press Conference, GBP CPY y/y @ 09.30 & EUR German ZEW Economic Sentiment @ 10.00 GMT
Earnings Reports: The Coca-Cola Company. Earnings per share forecast: 46 cents. Release: Before U.S. markets open today.
WHAT WE’RE WATCHING TODAY
Nikkei Jumps As Bank Of Japan Doubles Loan Programs
Following today’s earlier statement, the Bank of Japan has kept its broad monetary policy and assessment of the economy unchanged but also doubled the size of two soon-to-expire special lending programs in a move to encourage loan growth and support the world’s third-largest economy. The board voted unanimously to keep the pace of its monetary easing unchanged, as widely expected although it would double the scale of its programs lending to banks in order to stimulate loans and support the economy. The doubling of the lending facility is, however, according to some analysts, seen as a dovish signal that the BOJ is prepared to ease further and that it’s committed to keeping liquidity extremely loose. The yen weakened to as low as 102.74 against the dollar after the BOJ’s announcement and was trading at 102.72 at 2:46 p.m. in Tokyo, down 0.8 percent. The Topix index rose 2.8 percent.
Meanwhile, Asian stocks rose, with the regional benchmark index poised for a three-week high, whilst Chinese shares fell as the central bank drained liquidity from the financial system. Both the U.S. dollar and the Euro climbed higher against the yen. After briefly dipping, the U.S. dollar climbed to ¥102.57 and traded as high as ¥102.61 from around ¥101.98 just before the bank released its statement. The dollar bought ¥101.56 late Monday. The euro also jumped against the yen, buying ¥140.55 from around ¥139.50.
Forecasters Remain Bearish As Gold Extends Gains
Gold looks likely to extend gains to fresh three-month highs this week as mixed U.S. economic data encourages safe-haven buying though some warn the rally may be capped around $1,350. A U.S. data-heavy schedule this week may drive gold higher if releases including the closely-watched housing and inflation numbers are below forecasts and help weaken the U.S. dollar, though extreme weather conditions may distort the readings. Sentiment towards gold appears to have turned around and will continue to rise if this week’s big data dump continues to show mixed results. Mixed economic numbers compounded by the extreme weather mean that it’s unlikely that the U.S. Federal Reserve will cut monthly bond purchases beyond the current gradual pace. With Janet Yellen admitting that the economy clearly needs more work, more money printing will help gold’s position at $1,300 and beyond. Gold’s best forecasters are, however, still holding to their bearish forecasts for 2014 even after the metal posted its best start to a year since 1983. They say the rebound won’t last because higher prices will stifle purchases and the Federal Reserve will continue slowing stimulus as the economy strengthens.
What Awaits The Markets This Week?
With the Federal Reserve set to release the minutes from its January FOMC meeting on Wednesday, market participants will closely monitor them for any clues relating to the outlook and the future of quantitative easing. For those who rely on economic data to determine its next move, this is not an easy time. Two straight employment reports have shown weak gains in nonfarm payrolls (113,000 in January and a marginally adjusted 75,000 in December) but the extent to which bad weather adversely impacted those numbers is also a factor. The Committee will next meet in March with a broad range of data on the economy to look at, including another jobs report, although the February employment report could also be marred by weather conditions. The Fed’s minutes could consequently shed some light on exactly how much weakness the FOMC needs to see before it deviates from its course of tapering quantitative by $10 billion per month. The Fed is unlikely to deviate unless there is a material markdown of outlook. This could put a bid under the market, some traders say. The minutes, which are due for release on Wednesday, will shed light on the decision-making and debate that marked former Fed Chairman Ben Bernanke’s last meeting which was held on Jan. 28 and 29. The Fed’s next move will be announced on March 19, after the next FOMC meeting.
That sums up today’s highlights! Keep in touch for breaking financial news to help you with your trading. We hope you have a profitable day on the markets!
