Intraday Market Thoughts

From Shrinking Japan GDP to BoJ Rate Decision

by Adam Button
Feb 14, 2013 0:57

Japan prelim Q4 GDP contracted 0.1%, posting the nation's 3rd consecutive quarterly decline. A US retail sales report that was in line with expectations left the market searching for direction. The pound continued to weaken after the BOE report while the Australian dollar was the top performer. The BOJ decision follows later in the Asian session. A new edition of the Premium Insights will be released durint the Thursday US session. 

Japan's economy again unexpectedly shrank -0.1%, vs forecast of +0.1%. But markets are taking the news in stride following the recent advances in the Nikkei-225 and the positive impact of the falling yen on the economy. US trading was relatively mundane after retail sales rose 0.1% in January, which was dead on the consensus. Core sales were also very close to expectations. That left markets without any firm direction.

As the day wore on, risk trades were slightly stronger while the euro drifted 30 pips lower to 1.3450.

Early in Asia-Pacific trading, the New Zealand dollar jumped 60 pips to 0.8460 after the January manufacturing PMI jumped to 55.2 compared to 50.4 expected. A day ago, Finance Minister English was lamenting the effect of the strong NZD on manufacturing but this number showed an economy in full flight.

We may get an immediate response. At around 0300 GMT (there is no set time) the Bank of Japan delivers its latest interest rate decision. No significant changes are expected but the BOJ could hint at more in the pipeline.

Act Exp Prev GMT
BoJ Interest Rate Decision (FEB 14)
0.1% 0.1% Feb 14 5:00
Fed's Tarullo Testifies Before Senate on Regulation
Feb 14 15:30
Fed's Bullard to Speak on Economy in Mississippi
Feb 14 17:50

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