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Uncle Banerjee looks ahead to European and global markets
With a well-conveyed movement, bank of japan It achieved what investors had been waiting for and ended the policy after eight years. The change marks the country’s first interest rate hike since 2007.
Not only that, but the central bank has abandoned yield curve control, a policy in place since 2016 that caps long-term interest rates near zero, and is holding back riskier assets such as exchange-traded funds (ETFs) and the Japanese real. A real estate investment trust announced that it would not make any purchases for a period of time.
And just like that, cheap money has come to an end, and its effects are being felt all over the world, especially in the more opaque world of FX. carry trade As seen.
Several media reports over the past few weeks have hinted at the possibility of such a drastic move, which perhaps explains the market’s initial reaction. Japanese stocks were volatile but then rose, and the yen fell to 150 yen to the dollar.
Bank of Japan Governor Kazuo Ueda is scheduled to further explain the move in a speech at 0630 GMT (5:30 p.m. Japan time), as markets wait to see whether the last dovs in developed markets are ready to tighten further. You’ll have to pay attention to the tone.
But the Bank of Japan has vowed to maintain accommodative policy, and traders expect interest rates to remain at zero for some time.
The Reserve Bank of Australia was the other central bank to make headlines on Tuesday when it decided to keep interest rates on hold. This decision was expected, but the RBA further weakened its tightening bias, causing the Australian dollar to fall.
As a result, the Australian dollar/yen cross, which is often a good indicator of investor appetite for carry trades and global risk appetite, remained largely unchanged during Asian hours.
European stock exchanges are set to open lower as traders await Wednesday’s U.S. Federal Reserve policy decision, futures show.
The central bank is widely expected to remain on the sidelines, but the focus will likely be on its economic outlook and how many interest rate cuts it estimates it will make this year.
Key trends that may impact markets on Tuesday:
Economic events: Eurozone wages in the fourth quarter, Eurozone labor costs in the fourth quarter. German ZEW business sentiment in March
Expectations for stimulus package exit rise in Japan’s economy https://reut.rs/48MqEme
Waiting for wages https://reut.rs/3vJm6PP
(Edited by Jacqueline Wong)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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