USD/JPY recap for 17.09.2015
After the FED, it was Bonk of Japan's turn on the spotlight. In the short points of the report, several things come up:
- Members shared view that emerging economies had recently been weak
- Members shared view that while uncertainty remaining at a high level, emerging economies were likely to gradually improve from a somewhat longer-term perspective
- Members concurred that exports and production had been slowing, sluggishness had been observed in some areas in private consumption
- Members concurred that sluggishness in exports, production and private consumption was only temporary
- Many members said must be vigilant to effect on Japan's economy if growth in EMs, including China, were to decelerate further
- One member said export slowdown could negatively affect manufacturer's capex attitude
In the aftermath of the FED, UBS made a statement about BOJ maneuvering capabilities:
- BOJ may be able to take additional QQE measures more easily now that FED has showed a dovish stance that expressed concern over financial markets and China's economy
- If FED had raised rate, yen would have weakened, possibly making it harder for BOJ to ease policy further, if market turmoil together with downward pressure on stocks and USD/JPY emerge in Oct., BOJ could easily tak e additional QQE; macro-economic data due out in Oct. are also important
- Sees 50% probability of more BOJ easing in Q4; main scenario is for 30 Oct meeting although 7 Oct or 19 Nov meeting is also possible
Now as the dust settles after the FED's inaction, other central banks will be making their calls. But the lack of hike from the FED does push back the intention of the BOE to rise rates in the UK.
Also the Japanese parliament rejected no-confidence motion against PM Abe. Abenomic for the win!
USD/JPY FED reaction. While FOMC was accruing and was already clear that there will no rate hike, usd/jpy first jumped to a high at 12.984 and then it dropped hard for 80 pips to a close at 119.984. This was the first indicator what may go on for the BOJ Minutes after (the easing part). With the Minutes getting in and the negative comments we see today the yen appreciating against the dollar, reaching the support zone in 119.267. If the formation is broken, we may see a drop to 117.849.