Trade Desk Thoughts - Japan Overnight Call Rate

Actual 0.50%, Expected 0.50%B, Previous 0.50%

Release Explanation: The single most important reason why Currencies are bought and sold. A strong Interest Rate and robust business cycle will attract foreign investment. A weak Interest Rate will normally lead to a weak Currency as investors swap the higher yielding Currency for a profit. An increase in Interest Rate will have the effect of slowing economic growth. A decrease in Interest Rate is used by a Central Bank to stimulate economic growth. Economic strength can create Inflation, raising Interest Rates is one of the easiest way to contain Inflation.

Trade Desk Thoughts: The Bank of Japan kept the interest rate inline with the market expectations, at 0.50%. The finance minister and the several bank officials had suggested a few times that the economy will have some tougher periods ahead. The GDP contracted at the steepest pace in the last 7 years, while exports, the driver behind the Japanese economy are ready to take a deep plunge.

Forex Technical Reaction: The Yen is now trading just near TheLFB S2, after it had weakened during the trading session 35 pips. The yen crosses are trading lower, having the Eur/Jpy just under the 200-day moving average while the Gbp/Yen just broke the TheLFB S1.

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