Doubts were put to rest overnight regarding the incoming Bank of Japan leadership. The Upper House of Japan’s Diet confirmed the nominations of BOJ governor Kuroda and BOJ deputy governors Iwata and Nasako. The Lower House had approved the nominations earlier. The approval gave a boost to the Nikkei, but the USD/JPY reaction has been rather quiet.
Governor Kuroda has pledged to do “everything possible†to end the deflation that has gripped Japan for the last 15 years. Kuroda will oversee his first policy board meeting on April 3. While many anticipate a weaker JPY moving forward, to this point, the currency pair remains in the 95.90 – 96.30 range for the time being.
Resistance appears at the 96.70 level, while support is at 95.80. With the anticipated new policy of the BOJ including much more easing the USD/JPY is expected to test the higher levels going forward.
In Europe the EU Council meeting heads into its second day. Yesterday European Council President Van Rompuy commented that “the situation across Europe is of great concernâ€. He also stated that European leaders have pursued clear objectives to restore financial stability, reduce unemployment and improve long-term growth prospects.
The EUR/USD has remained above the 1.3000 level throughout the overnight trading after bouncing back from yesterday’s year low at 1.2920. The were rumors of Asian interest in buying EUR at the European opening this morning, which took the currency to the 1.3040 level before easing back, and is presently trading at 1.3015. Resistance is at the 1.3070 level while support at the present time is at 1.2990. While the overall market consensus remains on the downside, there are analysts expecting a test of the 1.3070 to 1.3130 range, to “fill in the gapâ€, before returning downward. As I mentioned yesterday, the “risk on†factor seems to have returned and later today US economic numbers are expected to show continued improvement which should be good for the US equity markets and could give a base to the EUR/USD.
The markets here on this side of the Atlantic will focus on the US economic numbers mentioned earlier. CPI is expected to rise to 1.8% year on year, while Industrial Production and Capacity Utilization should show improvement as well. These releases should benefit the DOW which is on a 10 day winning streak, a string of gains that hasn’t occurred since 1996. Another day and another record high. Investors are definitely buying into the US economic recovery. While the DOW is making daily highs
Since breaking its record on March 5, the S&P 500 closed a mere 2 points off its record high of 1,565.15, and should take a run at that today. The DOW closed yesterday at 14,539.14 and there has been talk of when, not if, the DOW approaches 15,000.
WIth anticipated strength in the DOW today, the EUR should keep its interim bid tone. Taking on “Risk†seems to be the order of the day. As for my thoughts on the subject I yield to the soothsayers warning to Julius Caesar, “Beware the ides of Marchâ€.
