Morning Market Update – BOC Sets a Pessimistic Tone

Asian Markets

The Bank of Japan’s (BOJ) Summary of Opinions on March 15^th and 16^th revealed that it will be suitable for the bank to adopt a monetary easing policy under the present market guidelines in order to achieve the 2% inflation target. The current market operations may exert an upward pressure which may become stronger as long as there is an improvement in the inflation trend line. In this situation, it is important to discuss on various measures to control the yield curve.

In addition, there is a need to address social issues such as employment, taxation and social security as soon as possible. The Bank of Japan said that the corporate services price in Japan were up by 0.8% in February and exceeded the forecasted values of 0.5%.

The People’s Bank of China (PBOC) Governor Zhou Xiaochuan’s said to the Asian leaders on Sunday that the insurance and banking sector would attract the foreign investors strongly. Also, China is planning to soon open its financial sector with the areas of foreign involvement including banking, insurance and payment systems.

Other Markets

Moving on for the day, we have the European Central Bank releasing Private Loans, which has been rising in the recent months and is seen to continue rising. We believe that these loans will hold an edge over other countries and rise steadily.

The IFO Current Assessment released by the CESifo Group for Germany is seen to decline with the forecasted value of 117.9 when compared to the previous month’s value of 118.4. The general business activity index in Texas went up by 24.5 and is gaining strength slowly. This should help the dollar since it has not been performing well in the last days.

The Business Outlook Survey released by the Bank of Canada showed a pessimistic outlook since last week.  Canada released a set of positive economic reports ahead of the BOC’s March monetary policy statement. Instead of feeling stronger with these positive economic reports, the BOC opted to present a pessimistic face by focusing on the negative aspects or saying that the positive developments are only temporary.
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