Forex Today: An eventless BOJ, USD strength to dominate ahead

An eventful Asian session, with the RBA minutes and BOJ’s policy decision turning out to be a non-event, as markets had already discounted their outcomes.

  USD/JPY rallied through 117.50 on the BOJ steady monetary policy announced and upgradation of the economic assessment, while the Aussie hovered near multi-month troughs on 0.72 handle.  The Nikkei 225 index staged a solid comeback post-BOJ decision and settled the day +0.53% higher at 19,495 points.

Further resurgence of broad greenback demand also dominated Asia amid Yellen’s upbeat remarks and return of risk-on trades in the market.         

Next on the cards we have BOJ governor Kuroda’s post-decision press conference and Germany’s trade figures ahead of the European open. While the Eurozone current account and UK’s CBI realized sales data will be published in the session ahead. In the NA session, the Canadian wholesale sales data will be reported, followed by the NZ GDT price index.

Main topics in Asia

RBA minutes: Considerable uncertainty about momentum in labour market, still saw excess capacity

The minutes of the December RBA meeting when interest rates held unchanged at 1.5% have been released.

Bank of Japan keeps rates steady, raises economic assessment

At the monetary policy meeting held today, the Bank of Japan (BOJ) maintained short-term interest rate target at 0.1%, maintained 10-year JGB yield target around zero percent. 

BOJ: Vote on yield curve control made by 7-2 vote

Further insights on the BOJ’s steady policy stance and upbeat economic assessment, via Reuters…

Japan’s Cabinet Office sees higher GDP in fiscal year 2017

Japan’s Cabinet Office sees real GDP at 1.5% in FY 2017 compared to the previous forecast of 1.2%.

NZD/USD hits fresh half-yearly lows, 0.6900 closer

The New Zealand remains subdued against its American counterpart in the Asian trades, with NZD/USD now meandering near fresh multi-month troughs.

Key focus for the day ahead

EUR/USD: Bears back in control, 2016 lows on sight?

The EUR/USD pair extends its consolidative mode near multi-year lows, now pushing the rate back below 1.04 handle amid resurgent USD demand across the board, as risk-on returns to markets.

More Trouble for AUD and NZD - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that after the recent rise in global yields, AUD and NZD now appear to be in the process of unwinding strength generated by a ‘search-for-yield’ during the first three-quarters of the year

US: Upside risk to H1 2017 growth – BNPP

Research Team at BNP Paribas suggests that the US economy has outperformed lately: the Bloomberg US economic surprise index is at its highest level since mid-2014.

Trump: productivity and potential growth? - Nomura

Analysts at Nomura explained that the success of Trump's policies in raising economic growth and incomes will depend, importantly, on the degree to which those policies boost productivity.