FTSE rides BoJ disappointment
|-
BoJ disappoints, yet FTSE remains afloat
-
Eurozone GDP halves, as stuttering recovery continues
-
Eurozone CPI manages to tick higher
The BoJ has paved the way for a weak start to trade this morning, with the likes of the FTSE and DAX falling sharply at the open. However, much in the same manner as the BoE and ECB decisions, markets typically have the ability to look past short term disappointments to instead focus upon the bigger picture. With the chance of a BoE rate cut currently priced in ass 100%, we are not far away from a fresh bout of monetary stimulus in the UK, which would arguably provide more of a boost to UK markets than any action in Japan.
The fact that the BoJ undershot market expectations should come as no surprise given the lessons learnt from both the BoE and ECB meetings this month. The BoJ has used every weapon bar the helicopter and there is going to come a time when the BoJ takes stock to consider whether their policies are even making a difference. That time is next month, with Kurodas comments signalling a review over the effectiveness of policies such as negative rates. Could it really be the case that markets expected a further cut but instead were faced with the prospect of a hike?
Today’s session is all about GDP data, with the Eurozone, US and Canada all disclosing their Q2 figures today. The Eurozone GDP figure of 0.3% marked a halving of the 0.6% figure seen in Q1, driving fears that the region is in reverse. Arguably the US has been faring particularly well since the EU referendum and amid a desire at the Fed for higher rates, a strong reading today could pave the way for increasingly hawkish FOMC rhetoric.
Eurozone CPI managed to tick higher in July, with the headline reading rising to 0.2%. No doubt, the fact that both growth and inflation remain in the doldrums will be a driver of future easing expectations from the ECB.
Ahead of the open we expect the Dow Jones to start 40 points lower, at 18,416.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.