SINGAPORE, Dec 19 (Reuters) – The yen dipped and
Japanese stock futures jumped after the Bank of Japan left its
guidance and ultra-easy policy unchanged on Tuesday, while oil
prices held their gains on jitters about Red Sea shipping
security.
MSCI’s broadest index of Asia-Pacific shares outside Japan
was 0.2% weaker and just below a four-month
high.
The Bank of Japan (BOJ) maintained its ultra-loose monetary
settings on Tuesday, as expected. The dollar gained about 100
pips or 0.6% to 143.62 yen.
The decision came during the lunch break for cash stock and
bond trade in Japan, but Nikkei futures rose from
roughly flat to a gain of more than 1%.
None of the analysts polled by Reuters had expected a
policy move in Japan, although 17 of 28 economists thought
negative rates were likely to be scrapped in April.
The Nikkei had ended the morning session 0.1%
higher. Nippon Steel shares lost more than 5% and
reached a five-month low after the company announced a $14.9
billion deal to buy 122-year-old U.S. Steel.
“The movement of a weaker yen is unlikely to become a trend,
partly because expectations remain for a policy revision for
January-March next year,” said Hirofumi Suzuki, chief FX
strategist at SMBC in Tokyo.
Elsewhere, oil held its overnight gains after
producer BP followed other shipping firms and said it would
avoid the Red Sea following recent attacks by Houthi forces.
Several countries have agreed to joint patrols to try to
safeguard commercial shipping.
Treasuries were marginally firmer, having sold slightly
overnight after Federal Reserve Bank of Cleveland President
Loretta Mester and Chicago Fed President Austan Goolsbee each
pushed back at market bets on swift U.S. rate cuts next year.
The 10-year U.S. Treasury yield was down 3.2
basis points at 3.9239%.
Equity markets had mostly shrugged off the remarks, with the
Dow Jones making a record high on Monday, while the S&P
500 drew nearer to the milestone.
Traders reckon the slowdown in inflation means the Fed will
have to ease policy just to stop real rates from rising, and are
wagering on early and aggressive action.
Interest rate futures markets are pricing in more than 140
basis points of Fed cuts next year and were also unmoved by
pushback last week from New York Fed President John Williams.
Aside from the yen, the Antipodean currencies made small
gains, helped by minutes showing Australian policymakers had
considered a second straight hike in December.
The Australian dollar rose 0.3% to $0.6723. In New
Zealand, a survey showed business confidence at its highest
level since March 2015. The New Zealand dollar rose
0.3% to $0.6231.
The dovish outlook for U.S. rates had dragged the dollar
index down 1.3% last week, although similarly aggressive
projections for rates in other major economies have kept a lid
on further falls.
Markets imply around 150 basis points of easing by the
European Central Bank next year, and 114 basis points of cuts
from the Bank of England.
That kept the euro to $1.0921 and sterling
to $1.2556.
Brent crude futures were last up 15 cents at $78.10
a barrel.
Bitcoin bounced from a one-week low to regain a
footing above $42,000 on Tuesday.
U.S. housing starts figures and Canadian inflation data are
due later on Tuesday.
(Reporting by Tom Westbrook in Singapore; Editing by Jamie
Freed and Edmund Klamann)
