Intraday Market Thoughts

Euro nears 1.30, BOJ may ease

by Adam Button
Sep 18, 2012 23:14

The euro slid lower on Tuesday but remained above 1.3000. On the day, NZD and CAD were the top performers while the euro lagged. The Bank of Japan may expand its quantitative easing program in the upcoming session. See Ashraf's latest HotChart.

Markets chopped sideways for the most part in US trading but the euro continued to give back some of its recent gains. EUR/USD fell as low as 1.3028 but later bounced near 1.3050.

Fundamentals were mildly positive as the NAHB housing market index rose to 40 from 37 a six-year high. The US current account deficit also narrowed by 12% in the second quarter, beating estimates.

Spanish 10-year yields fell 8 basis points to 5.90% after deputy PM Soraya Saenz de Santamaria said the bailout is under consideration, in the strongest hint that they will make a request yet.

Saudi Arabia weighed on oil prices, announcing it will offer customers extra supply through the remainder of the year. Officials said they were hoping to bring Brent down to $100 from current prices near $118/barrel.

The Bank of Japan will announce the result of its policy meeting at approximately 0400 GMT. A Bloomberg survey sees just 5 of 21 economists expecting further asset buying at todays meeting with the remainder saying moves will come in October.

Since the FOMC, the likelihood of BOJ action has increased and the market probably sees a 50/50 chance of a move today. Action would push USD/JPY through 79.00 while no move would stall the recent rally and spark a round of profit taking.

Nikkei news provided a hint about what may come, issuing a report saying the BOJ could ease, without citing a source. Other events on the calendar include comments from the Feds Lacker and Australias Westpac leading index. See latest HotChart.



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