Intraday Market Thoughts

US Marches Forward, BOJ Up Next

by Adam Button
Sep 4, 2013 22:41

The US edged closer to air strikes in Syria with a key vote. The Australian dollar was the best performer while the yen lagged in a classic 'risk-on' trade. The Bank of Japan decision is the focus in the hours ahead.  

Obama is reaching out to Congress to endorse limited air strikes in Syria and the first vote passed on Wednesdays as the Senate Foreign Relations Committee voted 10-7 in favor. Republicans are showing some reluctance to support the President and votes will now move to the House and Senate. Even if they fail, Obama can take action but it could severely undermine the effort.

Yen crosses briefly fell on the vote and gold rallied but both moves were quickly undone. The overall tone in markets was positive for risk trades and the S&P 500 gained 0.8%. It was the third strong day of gains for AUD/JPY which has risen 370 pips this week.

The Bank of Canada statement left all the key points unchanged but there was an unmistakable tone of disappointment in growth, especially in the US. Poloz promised better US growth and resulting investment when he took the job but the statement delayed the timelime, which probably delays BOC rate hikes, maybe even into 2015.

The focus will shift to the US economy for the remainder of the week. On Thursday it's the ADP and ISM non-manufacturing surveys followed by non-farm payrolls Friday.

Before that, the market will look to the Bank of Japan. Sometime after 0300 GMT, the BOJ decision will be released and at 0630 GMT Kuroda will hold a press briefing. The government is likely to endorse a sales tax hike in an Oct 2 decision and that will be part of the BOJ discussion. The main point, however, is the economy and it continues to show promising signs.

A new gold trade and 2 gold charts were added to the existing gold trade ahead of ADP, NFP, ongoing "Syria tensions" and tapering speculation.  All the trades are in the Latest Premium Insights
Act Exp Prev GMT
ADP Employment Change (AUG)
180K 200K Sep 05 12:15
Fed Minneapolis's Narayana Kocherlakota speech
Sep 05

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