Global central banks pauses

BOJ surprised the market with no changes to ETF purchases or a rate cut in the loans support program. USDJPY went south quickly gapping from 111.70 to 109.30 and continued to slide all the way to 107.92 (-2.6%) where it found a base before inching back to 108.50. The downside target now is 107.63 (triple bottom). While this may seem to be a disappointment, it could be the case that BOJ is pausing to prepare themselves to announce a bigger and more impactful package at the June meeting. Yesterday, the FOMC statement was fairly neutral as the Fed upgraded global outlook but downgraded domestic growth. They also excluded the "nearly balanced" wording in the statement which was a surprised. This morning's weaker US Q1 print (0.5% vs F 0.7%) confirms those expectations. EURUSD has been somewhat tamed trading within 1.1295-1.1370, following yesterday's 60 pts freefall to 1.1270 post FOMC. GBPUSD meandered in a tight range as well in the absence of any major central bank decisions or developments on the Brexit front. However, GBP crosses are under a bit of pressure with GBPJPY and EURGBP down -2.3% and -0.2% respectively. USDCAD continues to track oil (+0.6% $45.60) and currently hovers at 1.2550. Canadian GDP data is due tomorrow (F -0.2 QQ, +1.5% YY). NZDUSD was an outperformer overnight rallying +1.8% from 0.6850 to 0.6990 after RBNZ kept rates unchanged. A potential cut at the June meeting is still on the cards for many forecasters. Finally, Brazil's central bank held the Selic rate at 14.25% and with no swaps auction being announced ahead of tomorrow's month end. The focus has turned to the potential makeup of the new economic team under a Temer administration if Dilma gets impeached. Note UK and HKD markets are closed on Monday and Japan holidays starts Tue – Thur next week.

FX Indications

EUR 1.1325
JPY 108.5600
GBP 1.4582
CAD 1.2545
AUD 0.7636
NZD 0.6969
CHF 0.9688
SEK 8.0872
ILS 3.7590
INR 66.5250
CNY 6.4782
CNH 6.4877
KRW 1138.3500
BRL 3.4833
MXN 17.2199
RUB 64.4972

Stock Indices

Dow 18,015
Nasdaq 4,885
S&P 2,098
TSX 13,958
FTSE 6,322
DAX 10,321
Nikkei 16,666
Shanghai 2,946

Crude 45.56
Gold 1265.1

U.S. Treasuries
2 Year 0.817
3 Year 0.977
5 Year 1.338
10 Year 1.867
30 Year 2.714

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