Check out the brand new DailyFX trading forecasts[1] for Q3
MARKET DEVELOPMENTS – BOJ QE INFINITY, FED QT PROVIDING USD[2] BID
US equity futures are showing modest gains this morning (DJIA +0.1%, Nasdaq[3] 100 +0.4%, S&P 500[4] +0.3%) as the Bank of Japan prepare for QE infinity by pushing back the time it will take to hit its inflation target yet again. Alongside this, markets are bracing themselves for the earnings from Apple, whereby if they see a 6.5% increase in share price they will reach the $1tln mark.
** US and China are said to restart talks in order to defuse trade war. In reaction to these reports moments ago, USDCNH[5] fell to session lows, with the USD also taking a slight hit, while gold prices[6] edged higher.
JPY[7]: Overall, the Bank of Japan were dovish[8], which sparked a rally in JGBs, while the JPY weakened. The BoJ pushed back their expectation of when Japan will reach the 2% target beyond the 2018-20 forecast horizon. The central bank also added forward guidance by stating that policy rates will be kept for an “extended period of time”, while in regard to yields the BoJ noted that yields may rise up or down to some extent. Consequently, this dampened the hawkish expectation from recent media outlets, which in turn weigh on the Japanese Yen with the Nikkei 225[9] bolstered.
USD: Month end rebalancing seemingly dictating the price action for the US Dollar[10] for much of the morning, in which various bank models have suggested strong USD selling against its
