Dollar and Yen Sold as Bank of Japan Expands Stimulus Efforts

2012-09-19 06:44:00 Ilya Spivak, Head Strategist, APAC

Talking Points

US Dollar, Yen Fall as Bank of Japan Boosts Stimulus Efforts
BOE Minuets Unlikely to Produce Market-Moving Revelations
S&P 500 Futures Hint Risk-On Mood Set to Carry Forward

The US Dollar came under broad-based selling pressure as risk appetite firmed overnight, weighing on the go-to safe haven currency. The MSCI Asia Pacific regional benchmark index added 0.6 percent after the Bank of Japan opted to boost stimulus efforts. The Japanese Yen underperformed, down as much as 0.7 percent. BOJ Governor Maasaki Shirakawa and company expanded the size of the central bank’s asset purchase fund to ¥55 trillion and extended the program’s operational lifespan to the end of 2013 while downgrading their outlook for Japan’s economic growth.

Looking ahead, minutes from September’s Bank of England rate decision headline the calendar in European hours. The release is unlikely to have significant market-moving as policymakers remain in a holding pattern as they complete the latest increase in QE (due to run its course in November) as well as assess the impact of the new Funding for Loans Scheme (FLS). S&P 500 stock index futures are pointing higher, hinting the risk-on mood is likely to carry forward and keep the greenback on the defensive.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Current Account Deficit-GDP Ratio (2Q)	-4.9%	-5.2%	-4.5%
22:45	NZD	Current Account Balance (2Q)	-1.797B	-1.620B	-1.072B
0:30	AUD	Westpac Leading Index (MoM) (JUL)	0.4%	-	0.5%
1:53	CNY	Actual FDI (YoY) (AUG)	-1.4%	-5.8%	-8.7%
3:44	JPY	Bank of Japan Rate Decision (SEP 19)	0.10%	0.10%	0.10%
5:00	JPY	Leading Index (JUL F)	93.0	-	91.8
5:00	JPY	Coincident Index (JUL F)	93.8	-	92.8

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
8:30	GBP	Bank of England Minutes	-	-	High
9:00	CHF	ZEW Survey (Expectations) (SEP)	-	-33.3	Medium
9:00	EUR	Euro-Zone Construction Output s.a. (MoM) (JUL)	-	-0.5%	Low
9:00	EUR	Euro-Zone Construction Output w.d.a. (YoY) (JUL)	-	-2.8%	Low