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Day of reckoning beckons

As the European trading session draws to a close, stock markets are in a fairly buoyant mood heading into some major event risks. The DE30 (+0.67%) and EU50 (+0.51%) both built on yesterday’s gains early on, but faded into the cash close as attention turns to Tokyo and the Bank of Japan rate decision tonight. 

The USDJPY (-0.13%) is little changed on the day with both sides of the pair subject to potentially major moves caused by their respective central banks by the time of the US close tomorrow. US data this afternoon was largely irrelevant in the grand scheme of things but both building permits and housing starts did miss expectations slightly. Our latest report on the US dollar heading into the Fed can be found here. The NZDUSD (+0.30%) has seen some selling in the past couple hours after the global dairy trade auction yielded a lower increase than the past 3 readings, softening the Kiwi. The RBNZ also meet tomorrow, but expectations from the meeting are far lower than those from the Fed and BoJ.

In the commodity space, Gold (+0.21%) looks set for a second day of gains, but the precious metal still resides near its lowest point in 3 months. Oil benchmarks have spiked in the last hour, with WTI (+1.28%) turning positive on the day after earlier breaking yesterday’s low. The Tnote (+0.28%) has gained slightly ahead of what could be an eventful 36 hours for US bonds. 

Looking ahead the Bank of Japan dominates the Asian session with the monetary policy statement, rate decision and press conference from Kuroda all scheduled. We earlier looked at how these events could effect the Nikkei225 (+0.55%). Tomorrow’s moves will largely be driven by this and and position squaring ahead of the FOMC decision which is released at 19:00 tomorrow evening. API inventories at 21:30 tonight could be important for crude prices, ahead of the DOE release tomorrow afternoon at 15:30.



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