BoJ surprises US GDP soft
US PCE good Stocks struggle

Status quo doesn’t usually come as a shock, but that’s exactly what happened today. The Bank of Japan left interest rates and monetary policy unchanged, which surprised markets as they had been expecting more easing given the Yen’s recent strength. BoJ Governor Kuroda has decided to wait and see what the effect of negative interest rates will be before taking any further action. The Yen, which was trading above 111 before the announcement, strengthened significantly to 108 levels afterwards. Also, Japanese stocks were hit, with the Topix index dropping over 3%.

US GDP numbers came in slightly less than expected at 0.5%. This was offset by better than expected PCE data, a favorite measure of inflation by the Fed. This increase of PCE and near “full employment” could put some pressure on the Fed to raise rates this year, although no mention of a summer rate hike was noted in the comments by Yellen yesterday.

EURUSD: Euro is up this morning on better than expected economic confidence / sentiment reports and soft US GDP.

GBPUSD: The pound is up slightly on soft US data.

AUDUSD: Aussie dollar is up slightly also on soft US data.

USDCAD: Canadian dollar is stronger this morning on stable oil and weaker USD.