Morning Meeting: BOJ, give us our daily steroids.

Good Morning.

The Bank of Japan starts a two-day policy meeting today after last month boosting its asset-purchase program by 10 trillion yen to 55 trillion yen. Political leadership changes and deepening pessimism among manufacturers is compelling the central bank to do more to combat deflation and spur economic growth.

BOJ policy makers meet today for the first time since Seiji Maehara was named economy minister Oct. 1 and Shinzo Abe became leader of the opposition Liberal Democratic Party last month. Maehara is pushing the BOJ to consider buying foreign bonds while Abe wants an inflation rate of 3 percent, up from the BOJ's current 1 percent goal. Analysts expect the BOJ to leave policy unchanged but the political shift underscores forecasts for further BOJ steps by year end.

Hopes in BOJ steroids' injection sent the Nikkei 1.06% higher to 8,839.53 while depreciating the yen. The US dollar climbed against the Japanese currency through the session and  was buying ¥78.65, up from ¥78.53 in late North American trading Wednesday, and well above Tuesday's ¥78.13 late level. The currency move helped Japan's yen-sensitive exporters, with car makers as top performers.

Other regional benchmarks in Asia were positive with Hong Kong's Hang Seng Index up 0.20% to 20,929.27 and Australia's S&P/ASX200 index rose 0.31% to 4,452.50.

The Australian dollar fell to a one month low of $1.0182 after sluggish retail sales underscored restrained consumer spending, making the case for more rate cuts after one made Tuesday. The currency last traded at $1.0209.

In the commodity side Gold rose 0.24% to 1,784.10$ following on its path to north while on the Oil side: November futures for crude rose 0.2% to $88.28  barrel during Asian trading hours. The move follow a $3.75, or 4.1%, plunge overnight, when investors sold the commodity despite positive U.S. economic data and shrugged off a surprise decline in inventories.

From today's Asian action we got a confirmation that market are still steroids addicted: the BOJ is pressured to act “again” as to say once you have tried it  you cannot live without it.

Asian action will provide a good start for European markets, but today is Draghi's day, after unveiling a program last month for buying bonds of struggling euro zone states that seek assistance to ease their financing stress, the ECB is expected to keep interest rates at a record low of 0.75 percent.  But investors will be focused on Mr. Draghi's speech to have an hint on European economy pulse. The common currency awaits the ECB Chief 0.2% higher versus the greenback to $1.2926, stuck in the middle of a three-week low of $1.28035 touched on Monday and a 4-1/2 month high of $1.31729 seen in mid-September.

In US Later today, weekly jobless claims and factory orders for August will be released, as well as minutes from the U.S. Federal Reserve's September 12-13 meeting at which the central bank launched aggressive stimulus packages aimed at reducing high unemployment. These reports precede Friday's monthly payroll data, the first such labor market update since the Fed's action.

We are all at the starting grid: we know what to expect from this 2 days “Volatility”, therefore we need to adapt our trading plan to a higher volatility regime. We do not react, we follow our plan.

Originally posted at www.77sigmatrading.com