Highlight text to annotate itX
Asian equities are broadly lower today following the 93 point fall in the DOW overnight. There
were more official comments regarding Fed's tapering. Chicago Fed Evans noted "good improvement
in the labor market" and he would not rule out September tapering. However, he sounded
a bit uncertain as he'd still want to "see greater evidence that it's a sustainable improvement"
in the labor market. Atlanta Fed Lockhart also said the Fed could start dialing back
the asset purchase as soon as in September but he's "quite prepared to delay or even
reconsider" the timing if there is deterioration from this point. In the currency markets,
the US dollar remains mixed. The Japanese Yen is generally firm against
other major currencies as the Bank of Japan starts its two day policy meeting. It's widely
expected the central bank will keep policy unchanged, including keeping the pledge to
increase the monetary base at an annual pace of 60T to 70T JPY. Prime Minister Abe's advisor
Hamada said that the central bank should be prepared to expand the easing program if the
economy falters after the sales-tax hike in April. Some economists expressed concern that
the tax hike will slow the economy and inflation momentum.
The British Pound lost some momentum against the Dollar and the Euro ahead of the Bank
of England inflation report today. An important focus is the use of thresholds forward guidance,
as requested by the government. There are talks that in addition to inflation targeting,
the bank could link policies to nominal GDP. Employment is also something that might be
considered but it should be noted that unlike the Fed, the Bank of England doesn't have
the mandate to maintain full employment. On the data front, New Zealand unemployment
rate rose more than expected to 6.4% in Q2 but employment rose slightly more than expected
by 0.4% quarter on quarter. Australian home loans rose more than expected by 2.7% in June.
Today the Swiss will release CPI and foreign currency reserves in the European session
while Germany will release industrial production. Canadian building permits and Ivey PMI will
be released in the US session.