The latter half of the North American trading day was much less exhilarating than the first half as the bulk of the gains in US equities were made in the first half. The USD enjoyed a little more strength and WTI did the same as well on the back of a few fundamental factors working in its favor. In fact, the only distressing news of the day came from Washington DC which saw blackouts in the White House and other government buildings that ruffled a few feathers, but turned out to be nothing egregious.
Turning to events that will be happening this evening, the Bank of Japan will be making a monetary policy decision merely one day after the Reserve Bank of Australia surprisingly decided to leave their rates steady. The immediacy of the RBA decision could weigh heavily in currency value terms when considering the AUD against the JPY. While the Bank of Japan isn’t expected to do much when it comes to their interest rates or their Quantitative and Qualitative Easing program, the option to do something is still on the table. In fact, there are some analysts who believe that the BoJ will be increasing their QQE program by the next meeting, which is occurring a little later this month on April 29th. If that is the case, they could hint that something is in the works at this meeting so the actual announcement isn’t such a big surprise.
If the BoJ were to drop their insistence that there is no need for further easing at the present time and acknowledge that more could be coming, the AUD/JPY may be the most prime suspect for a strong rally. The prior belief that the RBA was cutting rates severely depressed this pair which was only partially recovered yesterday. The current price where the pair resides is an intriguing level where both support and resistance has been found recently and could act as a staging ground for a move in either direction, however, recent sturdiness from the RBA and the potential for frailty from the BoJ make it look more like a launch pad than a ceiling.
Figure 1:
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