The main action in overnight trade was in the oil market, where both WTI and Brent rallied again. The moves of about 3.0% were far more than could be explained by US Dollar weakness, and suggest that traders continued to respond positively to another drop in US inventories. This drop, combined with reports that China may be out looking for crude, suggests that the supply demand imbalance that drove prices down could be improving a bit. BOJ Looking ahead, there are still a number of potential developments that could move the markets today, before this weekend. Asia Pacific traders may key in on the Bank of Japan meeting out later today. Although the Bank is widely expected to maintain its QE program at current levels, with GDP and flash PMI running above expectations, traders may be looking for signs of future tapering, whether through an increase in hawkish dissenters from one at the recent meetings, or through changes in economic forecasts. A hawkish turn could boost JPY, especially relative to EUR. A neutral to dovish stance could keep JPY on its heels, especially relative to USD. Looking at the charts, the USD/JPY looks again to test its upper range of around 122 for the third time. A failure to break through could bring the pair back down to its support of 120 and 118.5.
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