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Asian Markets inch Higher before the BOJ

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The regional Asian markets inched higher during the Monday morning Asian trade session. Traders are waiting on the Bank of Japan to announce monetary policy as they start their policy meeting today.

In Japan, the Nikkei 225 was up 1.77 percent as shares of robotics giant Fanuc added ten percent. Fanuc released first quarter earnings earlier in the morning. The broader Topix index, in Tokyo, added 0.85 percent.

In South Korea shares were trading over one percent higher as the index moved up 1.14 percent before lunchtime, Hong Kong time.

Elsewhere in the Asian and Pacific Rim, the Australian S&P ASX 200 was up over 0.3 percent.

In China, the Shanghai composite was down slightly and the smaller Shenzhen composite was

Asian Markets expect The Bank of Japan to keep Monetary Policy Unchanged

Japan’s central bank is expected to keep their headline refinance rate as is. This rate is currently at minus 0.1 percent. They should also keep guidance of their 10 year bond yield close to zero percent.

The bank’s monetary policy makers are expected to discuss doing away with their target for government debt buying. This means they start to buy an unlimited amount of debt.

Japan’s economy has been hit hard by the Covid-19 pandemic. The central bank has urged businesses to close and people to stay home and this is severely depressing economic activity in the island nation.

Financial Market Traders Look towards Central Banks

Financial market participants are waiting on central bank meetings that are scheduled this week. On Wednesday, the Federal Reserve Board will announce monetary policy and rates and on Thursday, the European Central Bank will announce their monetary policy decision.

The Federal Reserve has already announced a bunch of measures to insulate against the Covid-19 pandemic. This means that the Fed is likely to stand firm this week.

The European Central Bank has a bigger decision to make. The ECB will likely extend their quantitative easing (QE) program to include junk bonds. This is worrying financial traders that this could widen the political divide in the European Union.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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