The yen headed for its biggest one-day decline against the dollar in more than two months after the Bank of Japan announced larger-than-expected monthly bond purchases at the conclusion of a two-day meeting, as reported by Bloomberg. Japan’s currency slid versus all of its 16 major counterparts as BOJ Governor Haruhiko Kuroda and his peers adopted a two-year time horizon to achieve their two percent annual inflation goal. “The BOJ certainly met and beat market’s expectations,” said Robert Rennie, the chief currency strategist in Sydney at Westpac Banking Corp. “I think reaching the inflation target in two years would be an objective that will be difficult to achieve, but I think what we have seen from the BOJ nonetheless looks impressive.”

The euro saw little action yesterday, as investors awaited today’s European Central Bank interest rate announcement and subsequent press conference with baited breath. The interest rate announcement scheduled for12.45pm GMT, and is expected to remain at 0.75%. However, there is a chance that the troubles of Cyprus over recent weeks have pre-empted a cut in the rates, in a bid to support the flagging European economy, and with unemployment in the area remaining doggedly high. One of the key counterarguments to an interest rate cut is the fact that Germany are concerned about its potentially inflationary effects, and the release of estimated year-on-year inflation numbers for Europe yesterday came in slightly higher than expected, at 1.7%. Nonetheless, Draghi’s press conference, which began at 1.30pm, saw interest rates remain unchanged and the Euro surged almost 2 full US cents after the fact. Basically saying nothing new, the same BS calms the waters thus avoiding the financial collapse that will one day come. The Black Swan will fly again, just hope we don’t get caught with our pants down. European economies banking systems if they show any sign that a Cypriot-style direct tax on deposits happen, then that would almost certainly cause a sharp sell-off in the euro over the coming weeks. Be aware and prepared!

Ref: Monex Europe Morning Report     www.donfilippo.ca

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