BOJ Baffles The Market, RBA Cuts Reserve Rate, No Major Announcements in US, Poloz Takes the Mic

JPY strengthens
AUD cuts rates while JPY continues to strengthen.

JPY

Japan continues to do very little when it comes to weakening its currency. Kuroda continued to say that the BOJ is committed to supporting its policies but after last week’s board meeting, where he gave the market a show of no-confidence, by not infusing more liquidity.  As a result JPY has continued to strengthen. The BOJ will need to announce a special meeting in regards to the strengthening of its currency if it wants to see JPY weaken versus its peers.

Kuroda, while in Germany, said that a decision on the sales tax would be made after the G7 meetings which occur May 26 through the 27th. There is speculation that the BOJ will do nothing to weaken its currency before the G7 in order to avoid criticism from the other nations. To add to the BOJ’s demise, the United States put it on a watchlist for its currency practices. Japan will be on holiday through Thursday of this week so the strengthening is not expect to end soon.

AUD

The Aussie took a dive last night after the RBA cut its rate by .25% leaving short-term rates at 1.75%. The reserve Bank of Australia showed the market its willingness to do all it can to have the AUD trade at its real value.

GBP

British manufacturing PMI was announced earlier this morning and was below market estimates by two points. Forecasts were 51.2 but the actual was 49.2. GBP reacted appropriately and is trading at $1.4633 (-.25%) to the USD and .79 (.56%) GBP to the EUD.

USD

The upcoming North American session will be relatively quiet on the announcement front. The Bank of Canada’s Poloz is set to speak at 1230 EST while the Fed has two FOMC members, Mester and Lockhart, who are scheduled to speak at 1030 EST and 1900 EST. A few data points will be released that are usually minor but hold more importance this week due to the Fed’s focus on manufacturing. The auto and truck sales for April will be released at 1330 EST. Forecast for US domestic truck sales for April is 8.3 million slightly higher than the 8.21 million achieved in March. All truck sales for the previous month were 9.66 million. Look for any adjustments.

API weekly crude stocks will also be released after the equity market closes at 1635 EST.

CAD

All eyes will be on the bank of Canada’s governor Stephen Poloz today as he is set to speak at 1230 EST. The Canadian dollar has surged in value during the last three months due to the increase in oil prices but down today roughly a half percent versus the USD as WTI dips 1%.

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