The dollar weakened and Yen Movement focus on the BoJ Meeting Today

The dollar weakened yesterday after the Fed announced it would buy individual corporate bonds in the secondary market, increasing risk-on appetite while delivering stronger US stock markets and safe-haven assets such as the weakening dollar. The Fed said it would begin buying corporate bonds Tuesday through the Secondary Market Corporate Credit Facility (SMCCF), one of several facilities launched by the Fed recently to increase market fusions after being affected by the Covid-19 pandemic. The Fed will use indexing studies when making purchases, which aim at creating a portfolio based on a broad and diverse market index of US corporate bonds. The dollar index weakened 0.47% to around 96.73. Against the yen, which is also a safe haven, the dollar moves flat around 107.33.

Today's Yen movement will focus on the BoJ Meeting. There was no major change in policy because the BoJ saw effectiveness in the 75 trillion yen stimulus program released in March. In response to the Covid-19 pandemic, BoJ Governor Haruhiko Kuroda introduced a special program to support corporate financing and maintain stability in the financial markets.

Gold weakened yesterday, but still held above the psychological level of $ 1,700. The market is still overshadowed by risk-off, in which situation investors prefer the dollar as a safe haven than gold. Meanwhile, concerns about the second wave of the spread of the corona virus also failed to lift gold. Beijing has recorded many new corona cases in recent days. While new infections in record numbers also occur in many US states. Gold is also pressured because of the threat of deflation.

Oil prices rose yesterday, supported by a drop in global oil production, even as concerns about weak demand increased due to a surge in the case of the corona virus. Prices had earlier fallen after BP PLC stated that the Covid-19 pandemic would have a longer lasting impact on the economy, weighing on oil demand and energy prices. However, prices then rose after Iraq would participate in reducing its oil production. Prices also rose after China reported crude oil throughput in May rose 8.2% from a year earlier as independent refiners stepped up their processing to meet recovery in fuel demand following the easing of the corona virus lockdown. In addition, EIA estimates a decline in oil production in July from US shale oil producers. The price of WTI oil rose 2.4% to $ 37.12 a barrel, while Brent oil gained 2.6% to $ 39.72.

Asian stocks rose this morning thanks to the strengthening of Wall Street overnight after the Fed announced further steps to support the market. The Fed said it would buy individual corporate bonds, marking a broader approach to purchasing corporate bonds. The MSCI Asia-Pacific index outside Japan gained 0.92%. The Nikkei index rose 2.86% and Kospi rose 3.1%.

Today's Focus: BoJ Meeting & Powell

The Bank of Japan (BoJ) will hold its meeting today, which is expected to keep interest rates at -0.10%. But the market will look for clues about the direction of policy going forward through the statement of the BoJ chairman. After that there is the UK employment data, which is followed by some data from the US, one of which is retail sales. Finally, the market will pay close attention to the speech of Fed chairman Jerome Powell

[About The Author]

Fanny has started her self-learning of Forex since 2005 and has joined an Indonesian broker as a financial consultant in 2009. Through “trial and error”, she has learnt a lot from failure experiences. She is now a renowned trainers for the forex beginners and has helped the clients to get the profits from trade.

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