2016-09-21 11:47:20

At today’s meeting the Bank of Japan maintained Deposit rate at the level of -0.1%. Volume of purchases of government bonds was left at the level of 80 trillion yen per year and ETF also remained unchanged. At the press-conferences the head of Bank of Japan Mr Kuroda said that the Bank would abandon its base money target and instead adopt "yield curve control" under which it will buy long-term government bonds to keep 10-year bond yields at current levels around zero percent. Mr Kuroda also said that the Bank of Japan, the US Fed and the ECB have achieved success in reducing long-term interest rates. The statement disagrees with the recent statements by some key Fed officials about high probability of the rate hike in the United States and plans of the Fed to tighten monetary policy.

Today, market' attention will be focused on the interest rate decision by the US Fed, which will be published at 18:00 (GMT). Judging by the futures market, investors assess the likelihood of the increase at 18%, while expectation that the Fed will raise interest rate at the meeting in December is 60%. The other world's largest Central Bank, the RBNZ will also make interest rate decision today. It will be published at 24:00 (GMT+3). It is expected that the RBNZ will keep interest rates unchanged, but will show inclination to softer monetary policy, based on continuing low inflation and strong New Zealand dollar, which represents a threat to the economy.

GDP growth in New Zealand exceeded forecast in Q2, but this does not mean that keeping of the interest rates at the current level will be sufficient to preserve and maintain economic growth in New Zealand, which depend on prices of export commodities, particularly milk powder. Export of dairy products is not less than 18% of total country’s exports. Low commodity prices in the world and relatively high rate of national currency have a negative impact on the economy of New Zealand.

The result of yesterday's dairy products auction has been disappointing. The price of the milk powder, which is the main export of the country, has grown only by 1.7% (against the forecast of 9%).

It is expected that today, the RBNZ will leave interest rate at the current level of 2.0%. However, the decisions of the US Fed will have a stronger affect on the pair NZD/USD than the decisions made by RBNZ. Investors will also focus attention on the speeches and statements of the Fed representatives at the press conference, which will begin at 18:30 (GMT), in order to understand plans of the Fed related to the increase in the rate later this year.

USD/JPY: Meetings of 3 Central Banks.  Fundamental analysis of 21/09/2016