Market Overview

ForexLive Asia Wrap: Japan to Not Buy Foreign Bonds


Japanese finance minister Aso had comments reported saying there wouldn't be buying of foreign bonds. This is a lessening of the rhetoric towards easing in Japan and saw yen strengthen a little. Aso also said he wasn't considering amendments to the BOJ law at present.
Japan's chief cabinet secretary Suga stated that the nominations for the new head of the BOJ would be made when Abe returned from his February 21 -24 US trip. This added delay also helped yen the strengthen. (Note: Yen didn't strengthen very much, USD/JPY buy orders ahead of 93.50 held).
The release of the January BOJ monetary policy minutes were upstaged somewhat by Aso's comments just minutes before the scheduled release of the minutes. The minutes showed some members of the committee want to extend the maturity of the BOJ's bond holdings, giving an insight into future monetary policy direction
The RBA released the minutes from their February meeting; while the minutes were dovish they were not unexpectedly so
Political news in Australia as the greens said that the minority government agreement with Labour is effectively over. They did, however, guarantee supply and pledged to have the government run its full course.
News of Chinese quarantine services destroying milk powder, said to include some from New Zealand sent NZD lower. Fonterra later denied the reports.

EUR/USD and GBP/USD both had very quiet sessions today after the New York holiday. There was some activity in yen and the Australian and New Zealand dollars, however.

Japan's finance minister Aso's comments saw USD/JPY drop 30 points before recovering over the course of the following hours, USD/JPY did, however, drift back toward its lows later in the session and is only a few points off its lows as I type. There is simmering concern in the market that with easing options becoming more limited after the G20 meeting and seeming delays in the nomination of the new BOJ governor until after Abe's US trip further yen weakness may be later rather than sooner. Having said this, the yen strength we saw today was only worth 30 points.

AUD/USD had a stronger day. The market was a little short going into the release of the RBA minutes, expecting a dovish tone. Overall, thats what they got, but it was well expected and positioned for, lending a little strength to AUD. Similar to the yen, though, the strength was limited to a small rally only. Expectations for a March rate cut are now below 27%.

NZD had some sharp action, falling 40 points on the rumour of New Zealand milk powder being destroyed by quarantine authorities in Beijing. It rallied to recover nearly all its losses when Fonterra denied the reports.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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