The Bank of Japan (BoJ) kept rates at 0.5% after lowering its inflation forecasts for 2007, only Governor Fukui‘s comments prevented the yen soared downward. Meanwhile in Europe, Sarkozy’s campaign introduces a wedge at the ECB, and the pound becomes volatile due to the uncertainty on the BoE’s next move. And against the backdrop of U.S. GDP. More can not be ordered.
FUKUI STATEMENTS OF SUPPORT TO THE YEN The session on Asian time has also been volatile, because the weakness of the data published in the early hours – the March core CPI and -0.3% in retail sales a year drop of 0.7% which is the sixth in a row – set the stage to receive the decision by the BoJ in a negative keyword. The fact that in its semiannual economic outlook, the central bank cut its forecast for core CPI in the fiscal year ending March 2008 to 0.1% from 0.5% previously, did not help the feeling on the yen. However, the Governor Fukui was surprised at the news conference, being more combative than expected, declaring that even if prices are slow to recover, the central bank should continue with the adjustments in interest rates while economic growth remains on track of strong recovery is expected: the outlook for growth remains at 2.1%. In this environment, USD / JPY (Dollar against the Yen) has been unsuccessful in its attempt to address the key resistance located at 119.85-90, whose passing had left the session control in the hands of buyers, with the possibility of continuation to 120.20-30.