Market Await Bank of Japan Policy Clarification

The Bank of Japan has begun a 2-day policy meeting, which is expected to signal under what conditions the Bank will finally begin to move away from its ultra-loose monetary policy.

1. The Bank of Japan has begun its latest policy meeting, with decision output expected tomorrow. The Bank has been the subject of much speculation concerning when it might finally abandon its ultra-loose, negative interest rate monetary policy. The Bank has stated before that its key metric will be wage growth leading to inflationary pressure which will push CPI up to reach its target consistently before such a change can be made. Markets were seeing signs of this and expecting an imminent change, which was helping to boost the Japanese Yen after a long period of weakness. However, it now seems such a policy change remains some way off.
2. The Reserve Bank of Australia will tomorrow release the minutes of its most recent policy meeting.
3. Asian stock markets are weak, but major US indices continue to advance after closing at 2-year weekly closing highs on Friday. The prices of the NASDAQ 100 Index and the benchmark S&P 500 Index are very near new 2-year high prices.
4. Crude Oil has risen strongly over the past few days after trading at a new 6-month low price, due to attacks on shipping in the Red Sea by Houthi forces which have pushed major shipping companies to refuse to transit goods through the Red Sea. The USA is signalling that it may put together a military operation to fully reopen the Red Sea to shipping traffic.
5. In the Forex market, since the Tokyo open, the New Zealand Dollar has been the strongest major currency, while the Japanese Yen has been the weakest, putting the NZD/JPY currency cross in focus. There do not seem to be any valid long-term trends to exploit in this asset class right now, although with the US Dollar weakening again last week, eyes will be on EUR/USD to the long side if we get a daily close above the key resistance level at $1.1008..
6. Bitcoin is continuing to fall from its recent 18-month high above $44,000. It remains to be seen whether it stabilizes at the nearby support level of $40,907, where trend traders may still find new long trade entries.
7. Cocoa futures closed lower last week, but remain within a valid and very strong long-term uptrend.