Morning Market Update – Selloff for the Swiss

Asian Markets

The Bank of Japan’s (BOJ) Deputy Governor Iwata said in a statement that Japan’s economy is slowly recovering and this showed improvements in the other global economies. He said that the BOJ should go on with the policies to lower interest rates as the inflation target of 2% is still far away.

The quantitative easing has been effective when combined with yield curve control. Since BOJ will be able to achieve the monetary easing, he feels that there is no need to buy the US treasuries from Federal Reserve.

News from Nikkei stated that “The yen has picked up strength to a level not seen in roughly four months, seemingly putting the Bank of Japan’s 2% inflation target in jeopardy. Although the central bank is not yet in panic mode, the situation leaves little room for optimism.” The Japanese Yen is showing a positive growth with a value of 110 this week. We hope that the BOJ brings in significant policy measures to uplift the growth of the Yen with a pressure on consumer spending.

Other Markets

The KOF Swiss Leading Indicator will be released later for the day by the Swiss Institute for Business Cycle Research. The indicator shows negative signs with forecasts seen at 106 than the previous data at 107.2 which sees a selloff for the Swiss.

The Services Sentiment indicator, released by the European Commission along with the Consumer Confidence, Industrial Confidence, Business Climate and Economic Sentiment Indicator are being released later for the day. We do not expect to see major changes as they remain the same when compared to the previous data.

Moving on for the day, we have the greenback data to be released. The Initial Jobless Claims are looking stronger with 248K when compared with the previous claims and this should boost the dollar. Personal Consumption Expenditures Prices and Core Personal Consumption Expenditures too are posted to be positive for the dollar and we can be sure of some strong dollar moves for the day.  Gross Domestic Product Annualized has been moving around the same levels and it should be interesting to see how the results unfold.

We end the day with FOMC Member Kaplan and Fed William’s speech for the dollars. The President of the Federal Reserve Bank of San Francisco, John Williams, told the Forecasters Club on Wednesday that “The data have spoken, and the message is clear: We’ve largely attained the hard-sought recovery we’ve been after for the past nine years.”