Forex Today: Yen pops as BOJ eases further, USD drops amid risk-on, ahead of a Big week
|The risk-on sentiment was at full steam in Asia this Monday, as the Bank of Japan (BOJ) additional stimulus boosted the equities and US stock futures. The BOJ announced further monetary policy easing to cushion the economic blow from the coronavirus pandemic.
Also, dovish expectations from the US Federal Reserve (Fed) and the European Central Bank (ECB) policy meetings due later this week added to the upbeat market mood. Meanwhile, reports that the North Korean leader Kim Jong-Un is ‘alive and well’ cheered the traders. Despite the risk-on, oil prices tumbled nearly 9% as concerns intensify over the oil global storage facilities. Gold prices also dropped nearly $10 to near $1720 region.
Withing the G10 currency markets, USD/JPY fell back towards the 107 level on the BOJ announcement, having ranged within 50-pips over the last few trading sessions. AUD/USD jumped to a new seven-week high above 0.6450 while the kiwi rose 0.70% to regain 0.6050. USD/CAD slipped back below 1.4100 despite the sell-off in oil prices, as the dollar remained broadly weaker.
EUR/USD bounced to 1.0850 but the further upside appears elusive amid uncertainty over on the European Union (EU) joint economic recovery plan. The cable tested 1.2450 as investors remained expectant of the UK PM Boris Johnson’s return to the helm and earlier than expected easing of the lockdown measures.
Main topics in Asia
Boris Johnson is “raring to go” ahead of his return to Downing Street – Telegraph
UK foreign secretary Dominic Raab: We are at a delicate and dangerous stage of this crisis
UK's PM, Boris Johnson, could ease lockdown before May 7th deadline – The Telegraph
Coronavirus update: US CDC reports its count of 928,619 cases vs previous report of 895,766
China says total of 82,830 cases on mainland and 4,633 deaths by end of April 26
China's Industrial Profits plunge 34.9% YoY in March, Aussie unfazed
S. Koran Official:’ Our government position is firm, Kim Jong-un is alive and well’
BOJ eases policy further, boosts purchases of corporate bond, commercial paper, USD/JPY drops
BOJ: Japan's economy to remain in sever situation for the time being due to coronavirus spread
Coronavirus update: Germany’s new infections and deaths continue to drop
Key focus ahead
We have a quiet start to a central bank dominated week ahead, as Monday’s EUR macro calendar is absolutely data-empty. We have the BOJ Governor H. Kuroda’s press conference scheduled at 0630 GMT that will be eyed for further details on the central bank’s additional monetary policy easing.
Attention shifts towards the NA session, with nothing of note except for the second-tier Dallas Fed Manufacturing Business Index for April, due at 1430 GMT.
In the absence of significant data releases, markets will take cues from the coronavirus-related developments, oil market sentiment and dollar dynamics.
EUR/USD: Path of least resistance remains to the downside
Despite Friday's positive performance, the path of least resistance for the EUR/USD pair remains to the downside, as the European leaders failed to agree on a comprehensive coronavirus stimulus package, leaving the European Central Bank (ECB) in a virus fight.
GBP/USD marks four-day winning streak ahead of UK PM Johnson’s return to office
GBP/USD remains mildly bid amid a broad US dollar weakness. UK PM “raring to go” back to No10, might take steps to shrug off allegations of non-performance. Virus/Brexit updates could compensate for a light economic calendar.
Market Outlook: Focus turns to Central Banks with decisions and data due
As we veer towards May, this week's focus will turn to central banks again, with the Fed, ECB and BoJ all announcing their latest decisions on rates.
Oil Market Special: Little comfort in oil in uncertain times
Oil prices are all about "Spot" and do not have the comfort of other assets like stocks which can look forward between 3 to 6 months or longer, given the policy backstops.
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