BOJ Moves but the Commodities Dont !

The biggest news of the morning so far has been the policy announcement from the BOJ. It took a long time coming and when it finally did, it was a real market mover. The BOJ removed the monetary base target and launched a 10-year interest rate target. They have strongly decided to target inflation with a target of 2% and have said that they would continue QQE until reaching the target. This shows their commitment towards aggressive easing. The headlines did not impress the market initially and we saw yen strengthening and USDJPY testing 101 but once the details began to emerge, then the realisation dawned on the markets that for once, they were taking their targets seriously and have initiated steps to achieve their targets. This assured the stock markets and the Nikkei jumped and this caused a weakness in the yen. The USDJPY bounced back strongly, broke through 102 and reached the 102.65 levels. However, Yen bounced back to 101.70, almost unchanged in morning session. The first resistance should be 102.8 which should cap the moves for now as we await the FOMC.

The commodities continued to range ahead of the Fed meeting with their ranges getting tighter and tighter as the days move on. But today could probably be the final day of these ranges across the markets and we can safely expect these ranges to break after the Fed announcement later on in the day during the US session. With a small part of the market expecting a surprise rate hike from the Fed and with all markets in a tight range ahead of the meeting, we could be in for a lot of volatility after the announcement.