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Forex Trading Strategies BoJ leaves rates low short term
Asia saw cross JPY selling after BOJ meeting and said overnight call rate to be around zero. BoJ regards CPI as stable if CPI y/y changes in the 0-2% range.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€˘ Canadian housing starts decline to 240.9K units in February (from 248.1K January), but still well above consensus 225.0K
â€˘ Fed non-voter Poole said he expects the US housing market to stabilise at a high level this year and this should result eventually in a slowdown in housing construction
â€˘ ECB's Liebscher continues with the central bank's general message to the markets - interest rates remain very low, even after the hikes of Dec and March and that economic outlook looks bright.
â€˘ BoJ's decision leaves USDJPY on the bullish path as rates will remain low for now and with a likely rate hike by the Fed in March we favor the pair testing higher in March.
THEMES TO WATCH â€“ UPCOMING SESSION
Plenty of things happening in the UK, industrial production for Jan is expected to slightly rise, but remains in negative territory y/y. Also at 9:30 GMT is the trade balance which is expected to narrow. More importantly for the pound is the rate decision which is expected to remain at 4.5%. In the weeks to comes we will watch out for BoE minutes. Last time 8 voted to leave rates unchanged and 1 to cut. Should this narrow, we may see more downside for the pound. Technically look for a break of 1.7280 in GBPUSD which would give scope for more downside in the weeks to come.
US Trade Balance out today, expecting a widening of the gap by -$1.3B to -$67.0B, with oil causing the most damage along with less congested ports.
This will likely not cause USD weakness as the main focus is related to US rates and nonfarm payrolls will likely be seen as more significant which we will cover in tomorrow's morning update.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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