Forex Investment and Currency Trading

The BOJ cut rates last Friday to 0.1% in a widely expected move following the aggressive easing by the FED on Wednesday. While Governor Shirakawa was perceived to be sceptical of the effects of a cut, his hand was forced by the FED`s moves and the subsequent drop in USDJPY. Policy rates are basically now at rock-bottom and the market`s focus will be on the next steps of quantitative easing. While the BOJ also announced direct buying of CP`s and an increase in its monthly JGB operations, its balance sheet has shrunk from the past years and there remains more room to maneuver should market conditions deteriorate further. In the short term, expect JPY funding pressure to ease and LIBOR`s to come down slowly.
 
OIS Levels
1M  0.105
2M  0.1025
3M  0.09065
6M  0.0975
12M 0.0925
 
12/22  BOJ Monthly Report
12/24  (US) Durable Goods Orders, Initial Jobless Claims
12/25  BOJ November Meeting Minutes
12/26  Jobless rate, National & Tokyo CPI