Focus turns to Bank of Japan after Dow plunges back under 20,000
Even though many Chinese markets remain on holiday, today has the potential to be quite active for Asia Pacific trading, particularly in Japan. Today, the country’s main basket of economic numbers are due and in the middle of that, a Bank of Japan decision. It has been a year since Governor Kuroda introduced negative interest rates but no changes are expected for today. Still, JPY has been on the rebound heading into the meeting, indicating that traders are not expecting any dovish news even if the bank doesn’t turn hawkish either.
The Yen also appears to be attracting renewed interest for its status as a defensive haven in an increasingly chaotic world, along with Gold. Over the course of January, traders have increasingly come to recognize that the post-election honeymoon rally had priced President Trump to perfection. In other words, the market was anticipating that all of his policies would be good for the US economy and quickly and efficiently implemented without disruption, opposition or retribution. LOL I almost got that out without laughing.
Stock markets around the world plunged to start the week headlined by the Dow diving back under 20,000 and carrying lower as traders who should have known better all along finally have figured out over the weekend that sweeping policy changes can also cause widespread confusion, disruption, and uncertainty.
The big question haunting markets today is whether the chaos over temporary changes to immigration policy could be a prelude to potentially bigger disruptions from changes to trade relationships and tariffs In the 2000-2002 bear market the last leg down started to the day when then President Bush slapped an import duty on Chinese steel in a bid to block dumping. Perhaps surprisingly, CAD and MXN rebounded today with the focus shifting away from NAFTA for the time being.
Today is the last trading day of the month so we could see some repositioning. Economic news also starts to ramp up with inflation and GDP reports from Europe and Canada plus US Chicago PMI. There is a ton of economic news on the way this week including BOJ, FOMC and Bank of England meetings, manufacturing and service PMI, plus ADP and nonfarm payrolls.
There have been no major announcements after the US close today.
Significant announcements released overnight include:
US personal income 0.3% vs street 0.4%
US personal spending 0.5% as expected
US core PCE inflation 1.7% as expected
US pending home sales 1.6% vs street 1.1%
US Dallas Fed 22.5 vs street 15.0
Germany consumer prices street 2.0% vs previous 1.7%
Norway retail sales (2.1%) vs street (0.1%)
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
4:00 pm AEDT ish Bank of Japan decision no change to interest rates or QQE
10:30 am AEDT Japan unemployment rate street 3.1%
10:50 am AEDT Japan industrial production street 3.0%
3:00 pm AEDT Japan vehicle production previous 6.6%
4:00 pm AEDT Japan housing starts street 8.3%
4:00 pm AEDT Japan construction orders previous (6.0%)
6:30 am GMT France GDP street 1.1%
7:45 am GMT France consumer prices street 1.1% vs previous 0.6%
8:00 am GMT Spain consumer prices street 2.3% vs previous 1.6%
7:00 am GMT Germany retail sales street 0.5% vs previous 3.2%
8:55 am GMT Germany unemployment change street (5K)
8:55 am GMT Germany unemployment rate street 6.0%
10:00 am GMT Eurozone GDP street 1.7%
10:00 am GMT Eurozone consumer prices street 1.5% vs previous 1.1%
10:00 am GMT Eurozone core CPI street 0.9%
10:00 am GMT Eurozone unemployment rate street 9.8%
8:30 am EST Canada Nov GDP street 1.4%
8:30 am EST Canada industrial prices street 0.5%
8:30 am EST Canada raw material prices street 2.87% vs previous (2.0%)
9:45 am EST US Chicago PMI street 55.0
10:00 am EST US consumer confidence street 112.8