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BoJ Leaves Policy Unchanged

Japan Interest Rates & QE Unchanged at -0.10%, 80 Trillion Yen

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In a widely expected move, the Bank of Japan left its monetary policy unchanged. However markets were cautious of any potential surprise announcement to policy changes at the meeting. USDJPY fell on the news but the reaction mostly remains muted ahead of the FOMC meeting that is due tomorrow.

China stimulus pledge

Shares in the Shanghai Composite rallied on Monday after the new head of securities regulation promised to pledge support saying that the equity markets will be propped up. The Shanghai Composite rallied 1.80%. The comments came about as over the weekend, China's industrial production numbers and retail sales both grew at a slower pace than expected. Investor confidence however surged following comments from the Chinese regulator. The Yuan however strengthened against the Dollar since Friday with the markets trading tight on Monday. USDCNH closed yesterday with modest gains at 6.4928.

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Iran to Increase Oil Production Despite OPEC Pressure

Iran announced plans to increase its oil production to 4 million barrels per day, or an approximately 33% increase from February's output. The country said that it will keep increasing production in order to make up for the deficit during the sanctions period. The increase in oil production from Iran would mark the highest production levels since 2008. Oil Minister Bijan Zanganeh said that OPEC should "leave them alone" until Iran makes up for its lost market share. Earlier in February, a consortium of oil producing countries including Saudi Arabia, Russia, Qatar and Venezuela proposed to freeze oil production output in order to tackle the supply glut. Oil initially rallied on the news and has been posting strong gains since then. Kuwait was also willing to join the proposal provided other members were committed. Crude oil futures for April delivery continued to fall after last week’s rally towards $38.25.

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Bank Of Japan Leaves Monetary Policy Unchanged

Bank of Japan held its monetary policy meeting today and refrained from taking any additional measures. Interest rates and QE remained unchanged with the board members voting 8 - 1 to keep policy unchanged. Japan's monetary base plan remained at ¥80 trillion with rates steady at -0.10% which saw the members voting 7 - 2. The central bank however said that it would keep its monetary policy accommodative until it met the 2% target inflation rate. The Japanese Yen was muted to the news but was fairly stronger. USDJPY is trading at 113.325 after the release of the bank's monetary policy statement.

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US Retail Sales Expected to Decline in February

US retail sales data for February is due later today during the NY trading session. Analysts forecast a decline of -0.20% on the core retail sales while the headline number is expected to fall -0.10% on a month over month basis. The declines come after January's data showed a modest increase of 0.10% on the core and 0.20% on the headline print. A beat on the estimates could reinforce the assurance that consumers could drive growth forward in the US. The US Federal Reserve is expected to meet later in the week on Wednesday and the retail sales numbers could provide significant short term volatility in the markets. EURUSD closed bearish yesterday following Friday’s gains at $1.11

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