Tag Archives: Bank of Japan

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Gold Set For Sixth Weekly Gain On Safe-Haven Bids

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: CAD Employment Change @ 12:30 GMT

WHAT WE’RE WATCHING TODAY

Gold Set For Sixth Weekly Gain On Safe-Haven Bids

Gold added to big overnight gains to trade near its highest in almost four months today and was on track for a sixth straight weekly gain stoking safe-haven demand for bullion. Spot gold nudged up 0.3 percent to $1,338.20 an ounce after closing up 0.7 percent yesterday when it rose to a peak of $1,345, the highest since March 19. Gold has gained more than 1 percent this week so a sixth weekly gain would be gold’s longest winning streak since February/March when it had a similar run. Gold is getting a boost along with other safe-havens such as the Japanese yen and bonds, as European and U.S. stock markets fell on Thursday on investor fears over financial troubles at the family-owned holding companies behind Banco Espirito Santo. Geopolitical tensions in the Middle East and Ukraine also continued to support gold, seen as an alternative investment to riskier assets such as equities. In Asia, India surprised bullion markets by keeping the import duty on gold and silver unchanged at 10 percent in its fiscal budget, a move likely to limit overseas purchases by the second-biggest bullion consumer. Physical demand in other Asian countries was also weak due the recent jump in prices. In China, local prices have been on par with the global benchmark or at a discount, underscoring sluggish demand.

Gold-going-up-Q

Dollar Heads for Worst Week Versus Yen Since April

The dollar headed for its biggest weekly decline versus the yen since April in advance of Federal Reserve Chair Janet Yellen testifying to lawmakers next week as traders cut bets the central bank will raise interest rates. A gauge of the dollar was set for its fourth weekly loss in five weeks as minutes of the Fed’s June meeting failed to provide additional revelations on the pace of rate increases and record-low volatility encouraged demand for higher-yielding assets. The Fed appears to be on the cautionary side despite data improving. With the current environment, where volatility remains low, the trend of carry trades remains in vogue and to a certain extent, the dollar is underperforming according to analysts. The dollar was little changed at 101.28 yen in Tokyo, having declined 0.8 percent this week, the most since the period ended April 11. The U.S. currency traded at $1.3601 per euro from $1.3609 yesterday. The yen appreciated 0.1 percent to 137.75 per euro after advancing to 137.50 yesterday, the strongest since Feb. 6.

Will BOJ Disappoint Again At Next Meeting?

Investors poured funds into Japan equities last year on the expectation of further easing measures from the central bank, but it appears that the Bank of Japan will disappoint again at its meeting next week. In April of 2013, the BOJ launched a massive quantitative easing program aimed at kick-starting Japan’s long-moribund economy. Investors pushed the Nikkei up more than 50 percent, partly on hopes that the central bank would deliver. So far, they have come away disappointed. Analysts say the central bank will likely let markets down again when it wraps up its policy on July 15. In addition to damping enthusiasm for the stock market, the delay in providing further stimulus may be weighing on efforts to revive the economy. Machinery orders data for May show core orders fell 19.5 percent from April, the worst monthly drop on record, disappointing expectations for an increase and wiping out hopes for a capital spending pickup to help drive economic growth. The BOJ believes it’s on course to boost inflation to its 2 percent target within the next two fiscal years.

boj

That sums up today’s highlights! We hope you have a profitable day on the markets. Have a great weekend!

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Just A Minute!

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.

Buildings are reflected on a Bank of Japan board in Tokyo

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!

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Kuroda

Kuroda’s Policies Send Japanese Investors Overseas

Japanese investors have been leaving their home markets preferring to send their money overseas in an attempt to battle their country’s unprecedented quantitative easing. In fact, the volume of bonds marked in dollars and euros bought by Japanese investors swelled to a four-month high in November.

A net 1.48 trillion yen ($14.3 billion) worth of dollar bonds and 972.9 billion yen of euro bonds were purchased by fund managers from Japan, which makes it the largest purchase among currencies that the Ministry of Finance data has tracked. Australian-dollar bond purchases have also increased for a second consecutive month that ended 11 months of sales.

Overall last year, the yen depreciated 17 percent, the most in a single year since 1979, as reported by Bloomberg Correlation Weighted Indexes that monitor 10 major currencies. Japanese central bank governor Haruhiko Kuroda effected the currencies decline through the implementation of policies that suppressed local yields by reviving inflation, and thus also prompting Japanese investors to look for higher returns in overseas assets. December and January saw a stalling of buying with 513 billion yen in bond sales taking place over five weeks, though the weekly data has as yet to be broken up by country.

At its meeting last month, the BOJ vouched to expand the country’s monetary base from 60 trillion yen per year to 70 trillion yen. As a measure against deflation, policy makers double monthly bond purchases to over 7 trillion yen last April.

According to a report by the Ministry of Finance, the deficit of the nation’s current account increased to 592.8 billion yen in November, the greatest gap ever recorded in data that reach back to 1985.

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