While the major currencies only really jumped out to marginal gains on the Asian open, the commodity bloc showed some impressive early gains on the back of this news, with Aussie, Kiwi and Cad all tripping some stops to help accelerate gains.
However, in the end, the policy meeting proved to be a let down, with the central bank still seemingly not too concerned with the need to fight against severe deflationary threats and a rapid appreciation in the Yen. The BOJ lifted the amount of funds available for the second time under the fixed rate facility that was set up last December, while also lengthening the maturity from 3 months to 6 months. The immediate fallout from this action was risk negative, and Yen positive, with the Yen rallying and commodity currencies selling off quite sharply as a result of the unimpressive central bank moves. Elsewhere, data released in Asia has also not been risk supportive, with Kiwi trade coming in wider, Aussie inventories softer, and UK Hometrack housing weaker than previous readings.
Looking ahead, the Eurozone business climate indicator (0.70 expected) is due at 9:00GMT, along with consumer confidence (-12 expected), economic confidence (101.6 expected), industrial confidence (-4 expected), and services confidence (6 expected). Despite the disappointing Bank of Japan meeting, US equity futures are still pointing to a firmer open early on, while commodities trade flat.
Written by Joel Kruger
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