Announcements from two of the most important central banks of advanced economies dominated the news flow of the prior week, kicked off by the decision by the Bank of Japan to leave interest rates on hold at -0.10%. Although they released the Comprehensive Review which indicated the bank’s changing stance towards the expansion of the monetary base, the latest decision gave the BoJ more flexibility to change the structure of asset purchases while targeting yields in government bonds to spur inflation. The decision as largely met with disappointment, sending the USDJPY pair just shy of the key 100.00 level before rebounding to near 101.00. The BoJ decision was followed by the US Federal Reserve which opted to leave monetary policy unchanged. However, the latest decision was marked by one of the highest levels of dissent in a year, with 3 out of 10 members voting for a rate hike. Speculation is now high that the Central Bank will raise rates by a quarter point during the December meeting as the November meeting comes too close to elections. The US dollar weakened after the decision, sending gold as high as $1344.45 per troy ounce before retreating modestly to end the week.
GDP Waiting in the Wings
Weekly Report - 26/09/2016