Japan’s BOJ Tramples On Interest Rate Hike Hopes

On the momentum of the Bank of Japan’s (BOJ) decision to lower interest rates into negative territory, the US dollar made gains against other major currencies.


It was at the end of their meeting that the BOJ decided on the action and investors were skittish based on the news on Wednesday that the Federal Reserve wouldn’t be certain whether it would raise interest rates anytime soon.  The revised US fourth quarter growth data only solidified what has occurred and although interest rates won’t be going up in the US in the foreseeable future, they’re definitely going down in Japan.


The stats across the board show a myriad of things.  Ranging from the dollar’s value against other currencies, the hoe sales, inflation, and more.  The dollar was indeed higher against the Swiss franc and the pound.  The Canadian dollar did well as the oil prices remained at an estimated $33 a barrel from a fall to a 12 year low below $27.  In New Zealand and Australia, their dollars turned up stronger. 


This all ends up with the US dollar index up 0.43% at 99.05 just slightly off from the previous session’s 2 week low of 98.45.


US pending home sales is a factor as mentioned earlier as they rose but were less than predicted last month.  Durable goods orders also dropped more than predicted in December.


In Europe, the EUR/USD fell 0.24% to a trade of 1.0913 with preliminary data shwoing the annual rate of inflation in the euro zone that rose by 0.4% that fell well within predictions and expectations after an upward statistic of 0.2% in December 2015.


An increase of 1.0% follows the Core CPI in January that went far beyond forecasts for the 0.9% that was predicted.  That was even after a 0.9% gain.  The Core CPI excluded food and energy costs.


In Spain, another report showed their domestic product advanced 0.8% during the fourth quarter and that figure met the forecasts.


These forecasts, indicators, statistics and reports all point to a global economy that is basically stagnating at key points and rising surprisingly in other while matching forecast in yet others.  Interest rates play a key factor here and with the Federal Reserve and the BOJ both having dealt disturbing news last week, analysts and investors will be hard pressed to figure out what is going to happen.  No rise in interest rates by the Fed in the foreseeable future along with a negative territory push by the Bank of Japan has cast a dark cloud on some forecasts and ws expected by others.


With the upcoming elections in the US, analysts will be looking at all changes with a sharp eye, looking for any opportunity to take advantage of.  There may be many a surprise in the coming year that will affect each quarter to the point that some will make reasonable decisions and others, rash ones.  No head of state wants to end up with the blame associated with economic downturns, but they’ll pile in smiling when things are on the upswing. 


Robert graduated from Brandman University, where he got his bachelor’s degree in Business Administration. Born in Massachusetts, Robert’s family moved to Kentucky in 2005 where he spent his college life and worked as an insurance agent for four years. Now is the founder and team leader of the website.