Forex Today – 23/01: Bank of Japan Stands Pat

In its policy meeting a few hours ago, the Bank of Japan unanimously agreed to maintain all its monetary policies, only tweaking its inflation forecast.

1. The Bank of Japan met a few hours ago and agreed to maintain its negative interest rate of -0.1% and all its other policies, to no surprise. Japanese stock markets continued falling slightly after the Nikkei 225 Index traded earlier at a new 34-year high price, while the Yen barely reacted. The Bank is not expected to move away from negative rates until April at the earliest.
2. Most global stock markets are trading a bit higher over the past few hours, possibly boosted by reports that a large market rescue plan is being considered by the Chinese government, leading to a strong rise today in the HIS.
3. US stock markets are exuberant despite starting this week with a bearish pullback, with the benchmark S&P 500 Index rising strongly to close at a new record high last Friday, as did the other major indices, notably the NASDAQ 100 which has been the best-performing stock index of all over recent months. Trend traders will be interested in being long of some or all these indices. Historical data shows that a fresh record high in the S&P 500 Index produced a median annual return over the following year of 13%. Traders and investors will be hoping this precedent holds over the coming year.
4. Crude Oil is looking bullish as it begins to rise out of its recent consolidation pattern, with bulls getting a tailwind from continuing tensions in the Red Sea and Indian Ocean.
5. In the Forex market, the Australian Dollar has been the strongest major currency since the Tokyo open today. The US Dollar has been the weakest. The greatest volatility recently has been seen in the USD/JPY currency pair.
6. Markets are awaiting policy meetings at 2 major central banks later this week: the European Central Bank, and the Bank of Canada. Neither expected to change their interest rates, but their policy statements will be closely watched.
7. Cocoa futures reached a new multi-year high price Friday, which will keep trend traders interested in this commodity on the long side. It has been exhibiting a powerful bullish trend for more than a year now.
8. There will be a release of New Zealand inflation data later, which is expected to show a sharp quarterly fall.