AceTraderFx : Intra-day Market Moving News and Views on Majors

Japanese Government plans USD186.60 billion stimulus package on deflated economy and effects of Brexit

AceTraderFx Jul 21: Intra-Day Market Moving News and Views
21 Jul 2016 01:03GMT

USD/JPY - ..... Dlr rose after New York close earlier today to a 6-week high of 107.45. Traders cited an early report by Kyodo was the driver behind such move.
It was reported this morning that the Japanese government is planning to compile a stimulus package of at least 20 trillion yen ($186.60 billion) to help the economy emerge from deflation and fend off possible adverse effects of Brexit.

This stimulus package is likely to be double the 10 trillion-plus yen that was previously expected, as it will now include projects for fiscal 2017 and beyond and increase "zaito" low-interest government loans by 6 trillion yen, Kyodo reported, citing the sources.
And it is also possible that the stimulus package and public expenditure may increase even further, depending on agreements between the government and the ruling coalition of the Liberal Democratic Party and Komeito Party, source from the news agency.

Prime Minister Shinzo Abe's government will seek Cabinet approval for the stimulus measures in early August, Kyodo reported. The service-sector index fell to 15 from 17 in June, and was seen unchanged in October, reflecting weak domestic demand.
Bleak business sentiment should add to calls for policymakers to do more to revive a flagging economy, with the government eyeing a stimulus package of 10 trillion yen ($94.62 billion) or more and the Bank of Japan under pressure to ease policy further.
Reuters reported ahead of Asian open today confidence at Japanese manufacturers held steady in July but was expected to worsen to zero in the next three months, a Reuters poll found, as Britain's vote to exit the European Union further clouded the outlook for Japan's export-reliant economy.

The Reuters Tankan, which tracks the Bank of Japan's quarterly tankan survey, also found the service sector's mood fell in July to levels last seen in April 2013 when the BOJ embarked on massive monetary stimulus to reflate the economy.
The monthly poll of 534 big and mid-sized firms taken July 1-15, of which 266 responded, offered an early glimpse of Japanese business sentiment in the wake of the Brexit vote, which briefly prompted a sharp yen gain to below 100 yen versus the dollar.

The Reuters Tankan sentiment index for manufacturers was unchanged at 3 in July and was seen worsening to zero in October, dragged down by exporters of cars, electronics, steel and chemicals.
The sentiment indexes subtract the percentage of companies saying conditions are poor from those saying conditions are good. A positive number means optimists outnumber pessimists.

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AceTraderFx Jul 21: Intra-Day Market Moving News and Views GBP/USD

Intra-Day Market Moving News and Views
21 Jul 2016 09:00GMT

GBP/USD - ...... Reuters reported British retail sales suffered their sharpest monthly fall in six months in June, with officials citing poor weather hurting clothing sales rather than any impact from the vote to leave the European Union.
While retailers had not reported any anecdotal evidence of the unexpected result of the June 23 referendum affecting sales during the five-week period which ended July 5, the Office for National Statistics said.

However department stores got a boost from sales around the Euro 2016 soccer tournament and Queen Elizabeth's 90th birthday, clothing stores suffered another poor month after unusually changeable weather.
Thursday's figures were the first official data which might potentially have shed light on how demand was affected by the referendum, after other measures painted a mixed picture of consumer demand.

The ONS said that during the June period, sales volumes fell 0.9 percent, a bigger drop than economists' forecasts of a 0.6 percent dip, after rising by an above-average 0.9 percent in May.
Compared with a year earlier, June sales growth slowed to 4.3 percent from a robust 5.7 percent in May, a bigger decline than the easing to 5.0 percent forecast.

Looking at sales in the second quarter as a whole - which smooths out some volatility in the data - volumes were up 4.9 percent from a year ago compared with 4.1 percent growth in the first three months of 2016, the best since Q1 2015.

Borrowing for the three months to June was 8.3 percent lower than a year earlier.
Britain's budget deficit was around 4 percent of gross domestic product in the 12 months to March, down from more than 10 percent in 2010 but still among the highest of rich nations around the world.

Consumer spending has been a major driver of Britain's economic expansion over the past three years, but economists polled by Reuters on Wednesday now see on average a 60 percent chance that the Brexit vote will tip the economy into recession.
Official figures on Thursday showed that public borrowing in June fell to 7.8 billion pounds from 10.0 billion a year earlier, a much bigger fall than the drop to 9.2 billion which economists had forecast.

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AceTraderFx Jul 22: Intra-Day Market Moving News and Views USD/JPY

Intra-Day Market Moving News and Views
22 Jul 2016 02:18GMT

USD/JPY - ..... It is relatively "all quiet on the eastern front" in Asia on this Friday morning after yesterday's intra-day big swings.

Although dlr nosed dived to 105.42 in European morning after Reuters news report quoting BoJ Governor Kuroda's remarks in an interview with BBC Radio 4 and dismissed the prospect of "helicopter money', short-covering swiftly took place when traders realised his comment/interview was made before 'Brexit', price ratcheted back to 106.49 in New York morning before moving back down again to 105.57 in Asia today.

Looks like sideways swings would continue and report of buying interest above 105.42 is likely to support dlr's downside and another rebound would be seen.
However, offers are tipped at 106.30/40 and more above with some stops above 107.00.
There is market chatter of good buying interest at 105.10-00 area, so buying dlr on dips is still recommended.

Economic calendar is very light on this last trading day of the week with U.S. Markit July mfg PMI being the only data traders can chew on, so so not expect big move to occur even the reading deviates sharply from street forecast of 51.6 vs previous reading of 51.3.

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AceTraderFx Jul 25: Intra-Day Market Moving News and Views USD/JPY

Intra-Day Market Moving News and Views
25 Jul 2016 01:42GMT

USD/JPY - ..... Dlr climbed to intra-day high of 106.73 following comments by BoJ Governor over the w/end who reiterated the central bank is not mulling so-called 'helicopter money'. Price opened higher at 106.19 (vs Fri's close at 106.09) and the pair then ratcheted higher in Australia, then in Asia on steady cross-selling in yen before easing.

Looks like another day of broad sideways swings would be seen following dlr's selloff from last Thursday's 6-week high of 107.49 to 105.42 and bids have been raised to 106.30-20 and more below with some stops reported below 106.00, however, good buying interest is touted above 105.50.

On the up side, offers are tipped at 106.70/80 and more above with stops above 107.00.
However, more selling interest is noted at 107.20/30, suggesting choppy range trading may well prevail today.

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AceTraderFx Jul 25: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
25 Jul 2016 04:06GMT

EUR/USD - ..... Euro fell to a 1-month low at 1.0952 in Asian trading as news of a suicide bombing near Nuremberg, Germany knocked price lower, just a repeat of Friday's news of Munich shooting in New York session.

Although euro staged a short covering recovery to 1.0888/89 short after New Zealand open, renewed selling emerged n pushed price lower and more sellers stepped in after the bombing news, suggesting market is very keen to re-test euro's 3-month bottom at 1.0912 made in June and stops have been touted below 1.0900.

Looking ahead, if euro manages to fend off selling interest and holds above 1.0912, another wave of euro selling may come when the key German Ifo business climate index is released at 08:00GMT, street forecast for July's reading to come in at 107.5 vs previous reading of 108.7.
If actual reading is lower than forecast, then euro looks set to head south towards 1.0900, so selling the single currency is the way to go after Friday's weakness in New York session.

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AceTraderFx Jul 25: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
25 Jul 2016 09:27GMT

EUR/USD - ...... Despite intra-day initial weakness to a fresh 1-month trough at 1.0952 in Asia, renewed cross-buying in euro especially vs yen lifted price to 1.0979 ahead of European open.
Later price retreated to 1.0961 and then staged another bounce to 1.0980 following release of better-than-expected Germany's IFO surveys (see our previous MMNs).

At present, bids are reported at 1.0960-50 and more at 1.0940-30 with stops below 1.0920.
On the upside, offers are noted at 1.0990-00 and then 1.1010-20 with stops above there.

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AceTraderFx Jul 26: Yen jumped broadly ahead of Tokyo open after a massive stimulus measure

Intra-Day Market Moving News and Views
26 Jul 2016 01:18GMT

USD/JPY - ...... The Japanese yen jumped broadly ahead of Tokyo open after Nikkei newspaper of a massive stimulus measure, dlr tumbled from 105.89 (Australia) to as low as 104.77.
To fund part of the package, the government will compile a supplementary budget for the current fiscal year of around 2 trillion yen, according to Nikkei newspaper. The rest will be funded in the budget for the next fiscal year beginning in April 2017 next year.

The Finance Ministry had initially earmarked 3 trillion yen for direct spending from national and local governments under its draft fiscal stimulus plan. But the amount was doubled on requests for bigger spending by government officials and ruling party lawmakers, the Nikkei said without citing sources.
The size of spending could increase further as the government presents the draft stimulus plan for negotiations with ruling party lawmakers from Tuesday, the paper said.

The direct spending would be part of a massive stimulus package to bolster the economy, which would also consist of state subsidies to private companies and lending programmes from quasi-government financial institutions.
The total size of the package, which could be announced as soon as Aug. 2, could exceed 20 trillion yen, reported Nikkei newspaper.

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AceTraderFx Jul 26: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
26 Jul 2016 03:06GMT

EUR/USD - .... The single currency is worth a mention because it is the most actively traded ccy pair in the world even though price went nowhere in Mon's lackluster trading.

Although price fell marginally lower below Friday's 1.0955 low to a 1-month trough of 1.0952 in Asia yesterday, price rebounded on short-covering, release of better-than-expected key Germany's Ifo data sent euro to 1.0997.
Price retreated to 1.0968 in New York but only to climb to session high of 1.0999 before retreating to 1.0983 due to renewed weakness in cable.

Although euro sideways move in Asia suggests traders would respect Monday's New York range until European open. Offers are tipped at 1.0995/00 with some stops above there, more selling interest is tipped at 1.1030/40.
Initial bids are noted at 1.0980-70 and more below with stops below 1.0950.

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US Dollar pared day's heavy loss and climbed ahead of Tokyo open

Intra-Day Market Moving News and Views
27 Jul 2016 01:40GMT

USD/JPY - .... Dlr pared day's heavy loss and climbed ahead of Tokyo open, price penetrated o/n New York top of 104.98 to 105.19 in early Asian trading. Traders cited Reuters report for this intra-day broad-based yen's weakness.
Reuters reported in Australia Support is growing within the Bank of Japan for additional monetary easing on Friday with several options being floated as possibilities, the Nikkei newspaper reported on Wednesday.

But some in the nine-member board feel the central bank has done enough for now and thus are expected to dissent to any proposal for expanding monetary stimulus, it said. Advocates of further monetary easing point to diminishing prospects of Japan hitting the BOJ's 2 percent inflation target and the need to match monetary easing with an anticipated fiscal stimulus package due out early next week, the paper said.

The BOJ bureaucrats have internally laid out several options including deepening negative interest rates, expanding government bond purchases and topping up buying of exchange-traded funds (ETF), the Nikkei newspaper said without citing sources.
The BOJ governor and deputy governors will consider these options, though there has been little progress on narrowing down the options. BOJ will meet for a two-day policy meeting that ends this Friday.

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AceTraderFx Jul 27: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
27 Jul 2016 03:16GMT

EUR/USD - ..... The euro is a difficult animal to trade and has probably frustrated both bears and bulls in recent several trading sessions.
Despite a surprise pop up above Monday's high at 1.0999 ahead of European yesterday to 1.1030 after tripping stops above 1.1000, news of an attack in France quickly led to broad-based euro selling, price retreated and later fell back to 1.0978 in New York morning before moving narrowly in New York afternoon.

Although range trading is expected to continue, pay attention to a slew of eco. data in European morning starting off with German import/export prices, Gfk consumer confidence index, then French PPI n consumer confidence n later Italy's business and consumer confidence.

Bids are noted at 1.0980-70 with stops below there, more stops are touted below 1.0950.
However, there is talk of good buying interest above 1.0910. Offers are tipped at 1.1010/20 and more above with stops reported above 1.1030.

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AceTraderFx Jul 27: Intra-Day Market Moving News and Views GBP/USD

Intra-Day Market Moving News and Views
27 Jul 2016 10:10GMT

GBP/USD - ...... Breaking news from Reuters, British retailers suffered the sharpest fall in sales in four years following the June 23 vote to leave the European Union, the Confederation of British Industry said today.
Stores have also cut orders with suppliers by the most since the 2008-09 financial crisis because they expect a further fall in demand in August, the CBI said - though it cautioned against drawing too strong conclusions from the figures.

Such "fiscal spending" appeared to have increased to 13 trillion yen. But the rest is likely to come from state subsidies to private firms and lending from quasi-government entities, which does not involve direct government spending and thus may not give an immediate boost to growth, analysts say.
Abe's administration has also offered few hints on how it will finance the package, casting doubts on Japan's ability to fix its tattered finances.

Sources have signalled the package will be funded in state budgets spawning several years. The government is considering issuing construction bonds but remains cautious about resorting to large-scale debt issuance.
Japan's finance ministry denied a media report it was considering issuing 50-year government bonds for the first time to capitalise on ultra-low interest rates.
While Abe may have succeeded in giving stocks a temporary boost, some analysts have doubts the impact will last.

The data represents an early gauge of how the retail sector has fared since the unexpected vote to leave the EU. Surveys of manufacturers and services firms last week suggested the economy is shrinking at the fastest pace since the financial crisis.

The numbers cover the period from June 28 to July 14, when Britain's Conservative Party was in the process of selecting a permanent successor to former prime minister David Cameron, who said after the vote that he would resign.
The CBI said its retail sales volume index for July fell to -14 from +4 in June, its lowest since January 2012. Expected sales for August were also the lowest since then.

Orders placed with suppliers fell at the sharpest rate since March 2009 and were expected to decline rapidly in August too.
Low inflation and high employment levels might help sales bounce back in the short run, but in the medium term the big fall in sterling would push up prices, the CBI said.

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Japan minster Ishihara said they & BOJ must work together to support the economy

Intra-Day Market Moving News and Views
28 Jul 2016 01:11GMT

USD/JPY - ...... Reuters reported this morning that in the wake of premier Shinzo Abe's announcement of a bigger-than-expected fiscal spending package, economy minister Ishihara was quoted as saying that the government and the Bank of Japan must work together to support the economy.
The remark suggests the earlier-than-expected announcement of Abe's economic package on Wednesday was an attempt by the government to pressure the BOJ into expanding monetary stimulus at a two-day rate review ending on Friday.

Abe unveiled a surprisingly large 28 trillion yen ($267 billion) stimulus package on Wednesday to reflate the economy, sending Japanese stocks higher and weighing on the yen.
Many BOJ policymakers prefer to hold off on easing on Friday, worried about the rising costs and diminishing returns of an already massive asset-buying programme that is drying up bond market liquidity.

But Ishihara's remarks suggest that political considerations may nudge the BOJ into action, even as the central bank struggles to beat economic headwinds with its dwindling policy tool-kit.
Finance Minister Taro Aso had also told reporters on Tuesday that he hopes the BOJ continues to do its utmost to beat deflation, signalling his hope of additional monetary easing.

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AceTraderFx Jul 28: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
28 Jul 2016 04:05GMT

EUR/USD - ..... Euro maintained a firm undertone in subdued Asian morning after o/n volatile moves.
The pair traded relatively narrowly in in New York morning as market awaited FOMC decision.
Price very briefly fell from 1.0998 to session lows of 1.0961 after Fed kept its key rate unchanged as widely expected and as its accompanied statement failed to give a clear indication of when the new rate hike would come, traders immediately covered their short and intra-day gain accelerated due to broad-based usd's weakness, euro easily penetrated Tuesday's 1.1030 high and then 1.1060 res and hit a temp. top of 1.1065 near New York close, buying continued in Australia and price climbed to 1.1076 before stabilising.
Technically speaking, this week's double bottom formation (1.0952 on Monday and yesterday's 1.0961 low respectively) bodes well for euro to make further headway towards next daily obj. at 1.1165 next week, so buying on dips is the way to go. However, looks like range trading may continue ahead of release of EZ eco. data starting with German unemployment data, then Italy's way inflation, several EZ sentiment index and then Germany's CPI data at New York close.

Bids have been raised to 1.1055-50 n more below with stops reported below 1.1000.
Offers are tipped at 1.1075/85 with more stops touted above 1.1100.

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Japan's Core Consumer Prices Suffered Biggest Annual Decline Since BOJ Stimulus Programme in 2013

Intra-Day Market Moving News and Views
29 Jul 2016 01:05GMT

USD/JPY - 104.35.. Reuters reported Japan's core consumer prices in June suffered the biggest annual decline since the Bank of Japan embarked on its aggressive stimulus drive in 2013, piling pressure on the central bank to expand an already massive stimulus programme.
Separate data showed household spending fell 2.2 percent, down for a fourth straight month, underscoring the fragile nature of Japan's economic recovery.
Factory output rose 1.9 percent in June and the jobless rate fell to 3.1 percent, marking the lowest reading in nearly 21 years, with job availability at a nearly 25-year high, reflecting labour shortages, other data showed.

The data comes hours before the Bank of Japan concludes a closely watched two-day rate review ending on Friday, with near-consensus in markets that it will deploy additional stimulus to match the government's planned big spending package.
The central bank, under pressure from the government, is considering specific steps for expanding monetary stimulus to address signs of weakness in inflation, people familiar with the bank's thinking said.
The bank has been buying assets like exchange-traded funds (ETFs), but already holds around a third of Japan's market for government bonds (JGBs).

The 0.5 percent fall in the core consumer price index, which includes oil products but excludes fresh food prices, was lower than economists' median estimate for a 0.4 percent annual fall. It fell for fourth straight month, and the decline was the largest since March 2013, just a month before the BOJ deployed the quantitative and qualitative easing programme.
The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, rose 0.4 percent in the year to June.

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The pound fell from ahead of Asian open today in late reaction on downbeat U.K. news

Intra-Day Market Moving News and Views
1 Aug 2016 01:09GMT

GBP/USD - 1.3228.. The pound fell from 1.3241 (AUS) to 1.3201 ahead of Asian open today in late reaction on a piece of downbeat U.K. news.
Reuters reported on Sunday from the Confederation of British Industry(CBI), British businesses are expecting economic growth to grind almost to a halt over the next three months due to weaker investment and consumer confidence after June's vote to leave the European Union.
CBI said the outlook was the weakest since December 2012 as the proportion of firms expecting lower output was now 3 percentage points higher than the share expecting growth.
This marked a sharp turnaround from June, when there was a 16 percentage point margin in favour of those anticipating growth.

"This data shows a weaker picture for UK economic growth," CBI Deputy Director-General Josh Hardie had said - though he added that the survey, conducted between June 27 and July 14, likely reflected a post-referendum low for consumer-facing firms.
"In manufacturing, although investment intentions are quieter as uncertainty weighs on corporate spending plans, the weaker pound is helping to boost exports' competitiveness."

The CBI's figures were partly based on its gloomy surveys of manufacturers' order books and retailers last week, with additional material from other services companies which make up the bulk of Britain's private-sector economy.
A survey by financial data company Markit earlier this month showed firms reported the biggest fall in activity since the depths of the financial crisis in 2009, while GfK's consumer confidence index chalked up its sharpest decline since 1990.

Markit is due to provide more detailed figures later this week, and the Bank of England is widely expected to cut interest rates on Thursday for the first time since 2009, when it presents an updated forecast for the British economy.

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AceTraderFx Aug 01: Intra-Day Market Moving News and Views GBP/USD

Intra-Day Market Moving News and Views
01 Aug 2016 09:35GMT

GBP/USD - ...... Cable swung wildly in volatile Monday trading. Price rebounded from 1.3200 (AUS) to 1.3273 in Asia and then fell back to 1.3204 in London morning after downbeat U.K. data.

Reuters just reported British manufacturing shrank at its fastest pace in more than three years in July, a survey showed on Monday, adding to signs that the country's vote to leave the European Union is hurting growth.
The data could give the Bank of England more impetus to cut interest rates on Thursday, after it surprised markets by holding fire in July but said most of its policymakers were leaning towards stimulus in August.

The Markit/CIPS UK manufacturing purchasing managers' index (PMI) fell to 48.2 in July from 52.4 in June, its lowest since February 2013 and below an initial "flash" reading reported in late July of 49.1.
Measures of output and new orders fell below the 50 mark that denotes growth for the first time since early 2013 due to weaker market conditions at home and uncertainty related to the EU referendum.
The output index fell to 47.8 in July from 53.6 in June, its lowest since October 2012, while new orders - which grew robustly in June - suffered their sharpest turnaround since 1998 and fell at their fastest rate in over three years.

All but three of 49 economists polled by Reuters expect the Bank of England to cut interest rates by at least 25 basis points on Thursday, but economists were divided on whether the Bank would restart its bond-buying programme.
The BoE will have to be careful to balance any hit to growth with rising price pressures, which were already evident in the PMI manufacturing survey.

Average purchase prices rose at their fastest pace in five years, with companies citing higher commodity prices and higher import prices, the latter resulting from the weaker currency. Sterling fell to a 31-year low against the U.S. dollar after the Brexit vote but has recovered some of that ground since.

Output price inflation was also the highest in nearly two years.
But the boost to exports from a weaker pound was less marked than previously estimated, Dobson said. A measure of new export orders slowed in July after hitting a seven-month high in June.

The PMI numbers were broadly in keeping with official data suggesting industrial production slowed towards the end of the second quarter after a strong April.
Data covering the post-Brexit period has been scarce so far. But there are signs consumer confidence is struggling, while Markit said its earlier one-off "flash" PMI surveys were consistent with the economy shrinking by a quarterly 0.4 percent if they persisted.

British finance minister Philip Hammond downplayed the flash PMI numbers saying they were a measure of sentiment and not of "hard activity".
But the numbers were enough to sway BoE policymaker Martin Weale, who more recently had been on the hawkish side of the rate-setting committee, to view the economic outlook "rather differently" he said.

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AceTraderFx Aug 03: Intra-Day Market Moving News and Views USD/JPY

03 Aug 2016 01:14GMT

USD/JPY - ...... BOJ's policy board members shared the view that inflation expectations had weakened somewhat in the short term but remained on an upward path in the long term, minutes of the Bank of Japan's policy meeting held on June 15-16 showed on Wednesday.
The BOJ refrained from offering additional monetary stimulus at the June meeting despite anaemic inflation and weak global growth.
One member of in June repeated a call to reduce government bond purchases while another member said the focus has shifted to interest rates from asset purchases, highlighting doubts about the current policy framework.

At a subsequent meeting on July 29 the BOJ surprised investors by saying it would release a comprehensive review of its quantitative easing in September, reinforcing the view that the BOJ's current policy framework has reached its limit.

Reuters then reported Japan's top currency diplomat, Masatsugu Asakawa, said on Wednesday that foreign exchange moves were nervous and that he would watch the market closely.
Asakawa, the vice finance minister for international affairs, made the remarks to reporters at the ministry.

The dollar fell to a three-week low of 100.68 yen on Tuesday after the Japanese government approved a largely expected set of stimulus measures. It was trading around 101.20 yen on Wednesday.

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AceTraderFx Aug 03: Intra-Day Market Moving News and Views EUR/USD

Intra-Day Market Moving News and Views
03 Aug 2016 04:08GMT

EUR/USD - 1.1216.. Euro pares yesterday's gain to a 6-week high of 1.1234 (New York) in Asia on Wednesday as intra-day rally in dlr/yen led to broad-based usd's strength, suggesting consolidation below said temp. top would continue until European open as traders need more positive fundamentals to push the single currency higher.

Pay attention to release of a slew of economic data during European morning.
Today is PMI day with Italy releasing July services PMI, followed the same from France, then Germany and the EU. Afterwards, EU will release June retail sales.

Offers are tipped at 1.1230/35 and more above with stops above 1.1250.
Initial bids are noted at 1.1210-00 area with some stops reported below 1.1185.

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AceTraderFx Aug 03: BoE's 'Super Thursday', British pound is expected to capture centre stage in European trading today

Intra-Day Market Moving News and Views
04 Aug 2016 01:28GMT

GBP/USD - 1.3338.. The British pound is expected to capture centre stage in European trading as market keenly awaits BoE's 'Super Thursday' and the outcome of MPC monetary policy decision.
Reuters reported the Bank of England is poised to cut interest rates for the first time since 2009 later on Thursday, as Britain's economy teeters on the brink of recession after June's vote to leave the European Union.

Although the BoE wrong-footed financial experts three weeks ago by leaving rates unchanged, the central bank said most of its policymakers were likely to support action in August as post-referendum uncertainty depressed the economy.

Since then growth appears to have slowed sharply, and a closely watched industry survey on Wednesday suggested Britain's economy was shrinking at the fastest pace since the last time the BoE lowered rates.

Almost all economists now expect the BoE to cut rates by at least a quarter percentage point on Thursday to a record-low 0.25 percent, and many also think it may resume its multi-billion-pound programme of government bond purchases.
The BoE's chief economist, Andy Haldane, has said he is willing to respond to weak growth by using "a sledgehammer to crack a nut", but another, Kristin Forbes, said last month she had not seen enough evidence to support a rate cut.

While most business and consumer surveys point to a marked slowdown, it is too early for any cast-iron official data on how output has been affected by June 23's Brexit vote.
If the BoE does cut its Bank Rate to the lowest level in its 322-year history, it will join the Bank of Japan and the Reserve Bank of Australia, which both undertook unprecedented stimulus in the past week.

Only the U.S. Federal Reserve among the world's main central banks is considering tighter policy this year.
However, economists, including former top BoE officials, have doubts about how much good either rate cuts or more quantitative easing will do with both official interest rates and government borrowing costs already at or near record lows.

Charles Bean, who stepped down as the BoE's deputy governor in 2014, said the Bank still had options, such as expanding the array of assets it buys beyond government bonds to include corporate debt or even equities. But that could put public money at risk and be politically difficult.
"If you go into buying equities, as the Bank of Japan has dabbled with ... that is taking the Bank into quite political territory. If there was a decision to go that way it should be in conjunction with the Treasury," Bean said on Tuesday.

Many economists also expect the BoE to revitalise its waning Funding for Lending Scheme or take other measures to tempt banks to lend at record-low rates.

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BOJ has failed to reach its 2 percent inflation target

Intra-Day Market Moving News and Views
04 Aug 2016 08:02GMT

USD/JPY - ...... Reuters reported Japanese Economy Minister Nobuteru Ishihara said on Thursday the Bank of Japan's monetary policy "has not been wrong" although the central bank has failed to reach its 2 percent inflation target.
Ishihara told reporters that it's definitely not deflation, if you look at core-core, inflation index, which excludes food and energy prices, after one day after Prime Minister Shinzo Abe appointed him to continue as economy minister in the new cabinet. He continued saying it's just that they haven't reached our target (of 2-percent inflation).
To achieved this, they need an economic stimulus now, and rev up the engine to escape (deflation).

Earlier this week, the government finalised a fiscal spending package worth more than 28 trillion yen ($275.9 billion)to kickstart growth, which some economists say keeps pressure on the BOJ to pursue monetary policy in tandem with government spending.
The BOJ disappointed the market last Friday when it decided against increasing government bond purchases or further lowering negative interest rates, cementing the view that it is running out of options.

Speaking at a separate event on Thursday, BOJ Deputy Governor Kikuo Iwata reiterated the centra bank's readiness to ease policy again if needed.
Iwata echoed Ishihara's comment, saying monetary policy had contributed to pulling Japan out of deflation, although the bank has not met the 2 percent price target.
Ishihara also said it was important to keep a firewall between the government and the BOJ to ensure the central bank's independence while the two work together to defeat deflation and spur economic growth.

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