Focus On The BOJ Meeting - 21.1.2013

One of the highlights of the week will be the Bank of Japan two-days meeting, scheduled for January 21 and 22. But its possible outcomes have been discussed in the markets for a few months. It is no accident - the central bank has got a key role to play in the premier Shinzo Abe’s program. Recent statements made by top officials allow market participants expecting radical steps from the regulator for recovery of economic activity in the country, including increase in the inflation target up to 2% and an expanding asset purchases. Indeed, the last week macro statistics in Japan has been significantly weak. It is worthy to note the continuing decline in consumer confidence and falling industrial production index. Due to this factor, the Japanese yen vs. major currencies continued falling, and the USDJPY currency pair rose this morning to 90.22, the next multi-months maximum, but afterwards it fell to ​​89.41, that is probably due to the central bank meeting approach and partial closing of long positions. Euro also fell against the yen today to 119.00 after rising to 120.70 on Friday. As for the currency market, it is also worth paying attention to the strong movement for US dollar vs. British pound and Canadian dollar. British pound fell sharply on Friday amid weak statistics on retail sales that was much worse than it was expected. According to December results it had fallen by 0.3% within a month and grew by only 1.1% per year. As a result, the GBPUSD currency pair fell down to 2-months low at 1.5847. Canadian dollar was under pressure on Friday amid a sharp drop in consumer confidence by University of Michigan fallen in January from 72.9 to 71.3. The USDCAD currency pair rose to 3-weeks high at 0.9944.