Forex Forecast

FOMC & RBNZ Due The euro has maintained its momentum this week and risk appetite is consolidating gains across different asset classes.

Data Watching Intensifies News and data flow during the Asia session was limited, giving rise to another day of consolidation in the majors.

FX Consolidates Headlines during the Asia session brought no fresh perspective on the two themes currently driving FX markets.

Heavy Event Day There’s something for everyone today on the data front. Overnight Japanese CPI (excl. fresh food) came in at -0.2% y/y, underscoring the distance to the BoJ’s new 2% target.

Yen Weakens Again USDJPY resumed its upward journey overnight after Trade Minister Nishimura said USDJPY at 100 would not be a problem.

USDJPY Still Drifting Lower The Australian dollar held reasonably well in the face of a weaker than expect Q4 CPI report – although it was a little soft,

BoJ Adopts An Inflation ‘Target’ As widely expected, the Bank of Japan jettisoned its 1% inflation ‘goal’ overnight and adopted at 2% inflation ‘target’ in its place.

Yen Liquidity Dries Up USDJPY broke back below 90.00 overnight amid nervous and illiquid trading conditions ahead of Tuesday’s much-anticipated BoJ policy decision.

Yen Talked Down Again USDJPY broke above 90.00 overnight after doubts were cast on whether excess reserves held at the BoJ would continue to earn interest at 10bp.

Seeking Catalysts With earnings season progressing steadily risk appetite in general is expected to hold well, but sentiment in FX markets seems to have stalled somewhat as the market goes in search of more catalysts to continue the price action displayed of late.

Currency Concern Spreads Risk appetite was generally flat throughout the US session on Tuesday but leaving aside general asset market performance,