Bank of Japan’s Kamezaki on the Wires

BoJ’s Kamezaki: Now is not the time to exit unconventional actions
- Will exit temporary policies only when market fully stabilizes; markets still unstable
- Fiscal health will be the key factor in determining proper L/T rate decisions
- Increase in JGB supplies are seen as only one reason behind recent rise in yields
- Sees recovery in near term, long term outlook continues to remain uncertain

Bank of Japan’s Kamezaki Comments

BOJ’s Kamezaki: Must examine upside risks of accomodative policy; Expects production to start recovering before long, but still watching downside risks to economy and prices

Bank of Japan’s Shirakawa on the Wires

BoJ Shirakawa: Expects Japanese economy to grow q/q in Q2

Bank of Japan’s Shirakawa Comments

BOJ’s Shirakawa: Economic decline starting to level out, BOJ expects “mild recovery”; Economy to pick up in 2H of 2009

USDJPY in a range but lower on more upbeat BOJ assessment

Last night the Bank of Japan upgraded its assessment of the economy for Japan citing a rebound in global demand.  The comments followed the monthly meeting where the central bank kept rates on hold at 0.1% which was expected.  Earlier this week, it was reported that the Japan GDP fell by -4.0% on a Q/Q basis in the 1st quarter.  This is after a -3.8% decline in the 4th quarter.   The decline was the 4th successive Q/Q decline.

The central bank also said last night that it would start accepting foreign bonds as collateral for loans to ease strains on the banking system (Quantitative easing).  However, because of the more positive comments, the thought in the market is the plans to return to full quantitative easing may indeed slow for fear of over inflating.

The USDJPY has been trading sideways today, with a bias to the downside. The high for the day has been 94.47 which occurred within the 1st hour of trading.  The low is 93.84 just reached.  This surpassed the previous loss of 93.86.  The price has been able to rebound after the brief selloff which suggests profit takers at the lower levels.  There is price support at 93.54 which represents the low price on March 19th (the price bounced off the 100 day moving average – blue line – at that time) .   This level will need to be breached on the downside to confirm the next leg to the downside (toward the 61.8% retracement level in the daily chart below).

On the upside, the price remains below the 50% retracement of the recent move higher off the January lows.  That level comes in at the 94.28 and should provide some upside resistance today.  Above that level is the 100 day moving average which comes in at  95.36.    Note also that the 100 hour moving average (see chart below) comes in near this level (95.32 is the current level) as does the high from yesterdays trade at the 95.27 level.   The combination of the three price levels makes the area more important from a technical basis. Expect good resistance against this level.

Bank of Japan Press Conference

BOJ’s Gov Shirakawa: Board fully discussed deflation risk at today’s meeting; Will not rule out any policy steps

- Does not believe Japanese deflation risk is high
- Global economy might not recover as prior cycles
- Lower growth potential no impact on short term monetary policy
- Japan FY09 GDP began the year with a -5% carryover

Bank of Japan Holds Rates

BOJ LEAVES RATES UNCHANGED AT 0.10% (AS EXPECTED); Lombard Rate Unchanged at 0.30%; Keeps monthly govt bond purchases at ¥1.8T
- The Decision was Unanimous

BoJ’s Shirakawa on the Wires

BoJ’s Shirakawa: Financial conditions remain severe, domestic demand remains week
- Exports have fallen dramaticaly
- Japanese economy is still deteriorating significantly

« Previous Page — Next Page »