- S&P cut Spains rating to BBB+
- BOJ keeps target rate unchanged but announces additional Yen10 trillion in JGB buying whilst reducing the fixed-rate program by Yen5 trillion
- Japans retail sales +10.3% YoY
- Japans industrial output +1% MoM
- Japans jobless rate steady at 4.5%
- Japan core CPI +0.2% YoY
- UK consumer confidence stuck at low level
- Reuters poll sees Chinese PMI improving slightly
- Stocks: Japan and Australia flat; HK and Korea +0.4%
- Gold $1657/oz; Oil $104/bbl
The news that S&P had downgraded Spain to BBB+ came at exactly 5pm NY time, the most illiquid time of the day. EUR/USD fell swiftly from 1.3240 to 1.3210 where it stabilised for a short while before the next wave of selling took it to 1.3180. Flows were generally fairly light and EUR/JPY buying in early Tokyo trade helped the single currency to rally somewhat. EUR/JPY fell to 106.70 after the S&P announcement but rallied to 107.25 in early Tokyo trade, before falling back on risk aversion ahead of the BOJ. Ranges: EUR/USD 1.3174/1.3240; EUR/JPY 106.67/107.45
USD/JPY moved in fairly tight ranges in line with EUR/JPY flows pre-BOJ. Strangely the first move after the announcement was down, with USD/JPY falling to 80.70 before then rallying to 81.10 and then inmmediately on to 81.40. The confusion lay with the differing headlines, some focussing on the 10 trillion in JGB buying but others focussing on the net number of 5 trillion, when you factor in the reduced fixed-rate program. Ranges: 80.65/81.43
AUD/USD played second fiddle to the EUR/JPY moves, trading in a quiet 30 pip range pre-BOJ, 1.0354/89
Cable 1.6167/90; EUR/CHF 1.2008/17
