[cppene]

Overnight the big news was the unscheduled meeting of the Bank of Japan. The BOJ introduced a 3 month fixed repo, kept the overnight lending rate at 0.1%, and provided 10 trillion yen of new lending. USDJPY jumped higher on the news of the emergency meeting, rallying from 86.50 to 87.50, but sold off (87.50 to 86.70) following the release of the details. The market was hoping for a more dramatic change such as an increase in JGB purchases and was therefore disappointed by the implemented policy measures. The key level to watch in USDJPY remains 87 as a close above this level would be constructive from a technical perspective. In other news the RBA hiked rates by 25bp to 3.75%, but the accompanying statement made it appear that there might be less tightening going forward in 2010. The AUD initially sold off as the market focused on the statement, but has since rallied on the back of positive risk sentiment as equities and gold have traded well.