BoJ: No Change, & USDJPY longs worth considering


The Bank of Japan remains a very boring central bank to follow with very little in terms of change. This last meeting was no exception and rates were kept at -0.10% and the 10 year bond yield target also kept at 0.0%. The only dissenter was Mr Katoaka who said that it was desirable to further strengthen monetary easing by lowering short and long-term interest rates, with a view to encouraging firms to make active business fixed investment for the post-COVID-19 era. For years Japan has struggled to see any inflation, so with inflation rising around the world it was interesting to see that the BoJ expect consumer inflation to remain around 0% for the time being.


The growth outlook for real GDP was tweaked a little with the 2021 median forecast being reduced from 3.8% to 4.0%. However, the 2022 forecast was revised higher to 2.7% from 2.4% and the 2023 median forecast unchanged at 1.3%.

Core inflation

The rise in energy prices was cited as the reason for the core CPI increases. 2021’s forecast was revised up to 0.6% from 0.1% and the 2022 forecast up to 0.9% from 0.8%. 2023’s forecast was unchanged.

Climate change

The Bank announced that it would introduce a new fund-provisioning measure to support private financial institutions’ various efforts in fields related to climate change. These may include (1) green loans/bonds, (2) sustainability-linked loans/bonds with performance targets related to efforts on climate change, and (3) transition finance


The recent pullback in US 10 year bonds has been a puzzle. However, longer term the Fed will move before the BoJ. It may only take one goods job report from the US. So, look for decent areas of support for medium term USDJY buying and just check the US 10 year yields keep moving higher…


Dollar holds firmer to start the session

The dollar is not letting up just yet to start the new week

Risk trades may be retracing slightly after yesterday’s sharp losses but in FX, the dollar is still keeping more resilient as we get into European morning trade.
EUR/USD D1 20-07
Commodity currencies are leading losses but it isn’t so much just contained to that space, as the euro and pound are also tracking lower against the dollar.
EUR/USD is contesting a fall below trendline support @ 1.1782 and nears the lows seen on 13-14 July @ 1.1772, which offers a daily support region. Below that, there isn’t much stopping the pair from a sharper drop towards the 31 March low @ 1.1704.
The euro saw a sharp reversal briefly yesterday, possibly amid some unwinding in carry trades, but for now, the dollar momentum is one that is tough to ignore as it is exposing plenty of technical vulnerabilities across multiple charts.

Australia coronavirus – Commonwealth Bank CEO says more lockdowns coming

Head of one of Australia’s ‘big four’ banks, CBA, says have to be prepared for further lock downs in Australia in the months ahead.

Cites slow vaccination progress, going to take some time to get vast majority of the population vaccinated
  • further shut downs will slow the economy’
  • will impact the labour marekt
  • will be e bounce back for the economy once health situation is controlled
Via local media here in Oz, link for more

Here is how the vaccination rollout is progressing:

Australia is ranked last in the OECD for its vaccination rate. Someone’s gotta be last I guess. federal government incompetence and complacency helped assure the place.

S&P averts closing below its 50 day moving average. Major indices all close lower.

Dow falls 946 points at the low

The major indices are all closing lower but off their lowest levels
  • Russell 2000, Dow transports down 10+ percent from the highs
  • NASDAQ down for the fifth consecutive day. Longest losing streak since October 2020
  • Energy sector sags as oil prices tumble. Crude oil has its worst day since September 2020
  • All 11 sectors of the S&P are lower. Technology fell 1.39%, discretionary fell -1.12%.  Energy fell -3.60%. Financials fell -2.79%. Materials fell -2.17%.
  • All 30 Dow stocks are lower. It is the worst day of the year for the Dow and the worst day since October
  • S&P and NASDAQ has the worst day in 2+ months
  • The S&P index dipped below its 50 day moving average but has rallied above the level into the close
A look at the closes shows
  • S&P index -68.65 points or -1.59% at 4258.51. That is above its 50 day moving average at 4240.31. The low dipped to 4233.13 before rebounding modestly into the close . The high reached 4296.40.
  • Nasdaq fell -152.25 points or -1.06% at 14274.98
  • Dow fell -725.81 points or -2.09% at 33962.04
  • Russell 2000 fell -32.54 points or -1.48% at 2131.22
The biggest Dow decliners were:
  • Boeing, -4.93%
  • American Express, -4.24%
  • Honeywell, -4.16%
  • Dow -3.72%
  • Walt Disney, -3.58%
  • Travelers, -3.25%.
The smallest Dow loser was:
  • Procter and Gamble, -0.04%
  • Walmart, -0.23%
  • SalesForce, -0.39%
  • Amgen, -0.42%.
Other big losers today included:
  • MasterCard, -5.6%
  • United Airlines -5.54%
  • Exxon Mobil, -4.99%
  • Schlumberger, -4.3%
  • American Airlines, -4.24%
  • Delta Air Lines, -3.74%
  • Emerson, 123.55%
  • whirlpool, -3.4%
  • Stryker, -3.37%
Some winners today included:
  • Novavax, dollars 12.70%
  • livePerson, +7.55%
  • Chewy, +6.83%
  • DoorDash, +4.86%
  • Nvidia, +3.41%
  • GameStop, +2.63%
  • Roblox, +2.17%
  • GoodRX, +1.99%
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