Talking Points
- Asian stocks finished Thursday with plenty of green on the screens
- The Bank of Japan reduced its inflation forecasts yet again, but raised its growth calls
- Australian labor data came in very strongly
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Asian shares were stronger Thursday as investors mulled the Bank of Japan’s July monetary policy decision and looked ahead to the European Central Bank’s later in the global session. A better tone for US corporate earnings also helped lift the overall mood.
The Nikkei25 added 0.6%, the ASX 200 rose by 0.6% and the Shanghai Composite was up by 0.4%.
The ECB is not expected to alter interest rates or bond buying but some in the markets think that President Mario Draghi may hint that the latter may be reduced in the face of better Eurozone economic numbers. The Bank of Japan left its policy settings alone but it did lower its inflation forecasts yet again, to the point where they suggest that the elusive 2% annual inflation target won’t be hit for at least two more fiscal years after the current one. Governor Haruhiko Kuroda did try to put the best gloss he cold on yet another inflation downgrade, but he did at least have the solace of increased growth forecasts to offer.
The Euro held close to 14-month highs against the US Dollar as investors looked to Thursday’s European Central Bank monetary policy decision. The greenback extended its gains against the Yen but faltered against the Australian Dollar once more as a blockbuster Australian employment report added to the currency’s allure.
Gold prices edged down by about 0.2% as investors looked toward the European Central Bank. Crude oil prices were steady after gaining Wednesday on news of falling US inventories. The main benchmarks lost a scant three cents or so per barrel.
The rest of the session will offer that ECB decision, of course, and also consumer-confidence data out of the Eurozone and official UK retail-sales figres. US jobless claims data and its leading indicators are also due.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
