BoJ keeps monetary policy on hold and pushes back inflation goal as expected

AUD retraces jobs gains as the 0.8000 level holds firm.

Looking ahead, highlights include UK retail sales, ECB monetary policy decision.

Bank of Japan:

Kept rates at -0.10%, 10yr JGB yield target at 0.00% and annual pace of JGB holdings at JPY 80tln.

Increased Real GDP forecasts for FY17, 18 and 19.

Decreased Core CPI forecasts for FY17, 18 and 19

ASIA

Asia equity markets took the impetus from Wall St. where all tspanee majors closed in the green with the energy sector outperforming on the back of a larger than expected draw in DoE crude oil inventories. ASX 200 (+0.6%0 outperformed on the back of the upside seen in oil markets, as well as a strong performance from Financial names, while Nikkei 225 (+0.6%) benefitted from a softening JPY, although the currency breaking above the 112.00 handle. Elsewhere, Shanghai Comp. (+0.25%) and Hang Seng (+0.2%) conformed to the upbeat tone, with the former lagged following a lacklustre CNY 60bln liquidity injection by the PBoC. Finally, 10yr JGBs traded lower amid the global risk-on conditions, with underperformance in the long end leading to steepening of the yield curve.

Japanese Trade Balance (Jun) 440B vs. Exp. 488B (Prev. -204.2B)

Japanese Imports (Jun) Y/Y 15.5% vs. Exp. 14.4% (Prev. 17.8%)

Japanese Exports (Jun) Y/Y 9.7% vs. Exp. 9.5% (Prev. 14.9%). (Newswires)

PBoC injected CNY 40bln via 7-day reverse repos and CNY 20bln in 14-day reverse repos

PBoC set CNY mid-point at 6.7464 (Prev. 6.7451). (Newswires)

EUROPE/UK

N/A

FX

FX markets were relatively quiet for the most part once again, however Australian jobs data and the BoJ did provide some volatility. AUD initially strengthened following strong Full Time Employment Change suggesting the better quality of jobs, however as participants digested the readings AUD moves were pared and the currency weakened further, as the headline missed expectations and was revised lower. Elsewhere, JPY pairs continue to crawl higher to claw back some of their recent losses with USD/JPY breaking back above 112.00, as the BoJ held rates as expected and offered no surprises.

Australian Employment Change (Jun) M/M 14K vs. Exp. 15.0K (Prev. 42.0K, Rev. 38.0K)

Australian Unemployment Rate (Jun) M/M 5.6% vs. Exp. 5.6% (Prev. 5.5%, Rev. 5.6%). (Newswires)

COMMODITIES

WTI crude futures remained flat during Asia hours after the commodity gained in price after the larger than expected draw in DoE crude inventories during Wednesday’s session, whilst gold (-0.3%) saw very mild declines, with participants side-lined as they digest the latest BoJ meeting announcements and the ECB meeting later today. Elsewhere, copper gained amid the more risk on sentiment in markets.

US

US House Budget Committee has approved fiscal 2018 budget plan that clears path for Republican Tax Reform Legislation

Treasuries were unreactive to any news flow today, US 10 year T-notes settled down 2 ticks at 126.01+.