Post FOMC and BoJ aftermath contained, stocks recovering well to aid sentiment

Much of Thursday’s trading session was dealing with the aftermath of the BoJ inaction, where widespread expectations of fresh stimulus were dashed, sending the JPY sharply higher against all currencies. Leading the way was USD/JPY, having retested 111.90 highs on the week, but trading through 109.00 in Asia, and briefly through 108.00 in am London. That the FOMC statement was again non-committal on rate hike timing added to the selling momentum, with early USD losses elsewhere on the modest size ahead of the US Q1 GDP read. Median forecasts around +0.7% were already half that of Q4 2015, but at +0.5%, there was enough justification for minimal USD reaction, with consumption healthy enough and seasonal factors considered. This did not stop USD/CAD hitting now long term lows ahead of 1.2500, with Oil still probing higher, but strong support seen ahead of the figure level. AUD remains hampered by the soft inflation read from earlier in the week, and was duly contained in the mid .7600’s, but NZD/USD is looking better supported after the RBNZ held steady on rates yesterday also. Pre .7000 well offered for now. A mixed session for GBP, tempering recent gains, with Cable running into sellers above 1.4600 again. EUR/GBP has tested .7800 again, but rebuffed for now. BoE’s Carney said the UK economy appears to be slowing a little but conceded this was likely down to EU referendum uncertainty. EUR/USD continues to trade above 1.1300, but is looking offered through 1.1350-60 levels. As long as 1.1200 holds lower down though, a retest higher cannot be ruled out, especially given the negative risk correlation. Sentiment in equities did improve later in the day, but ongoing jitters on Wall Street at these elevated levels. Facebook earnings have provided some near term reprieve though.