Bank of Japan failed to impress markets - 22.1.2013

The Bank of Japan meeting ended this morning, the regulator has doubled the target inflation rate to 2%, and decided to launch the program of asset purchases with open terms. Thus, since 2014, the Bank will buy assets worth 13 trillion yen per month. While the existing $ 101 trillion yen program of asset purchases ending till the end of 2013 will remain in power. Let us note that many market participants expected the existing program to be increased. However, we can not say that the BOJ meeting outcome disappointed market participants. We would say it was no surprise. The central bank could probably do more, limited the above spoken measures for today. Interest rates remained in the same range for the overnight rate at 0% -0.1%. This morning, the yen was supported against major currencies. The USDJPY currency pair dropped to 88.88 and EURJPY – to 118.64. Although the trend for the yen remains negative there may be a corrective movement observed in the near future, taking the high overbought currency pairs into account. In general the situation in the currency market this morning looks calm. The US dollar lost some ground following the morning trading, but the major currency pairs are trading near yesterday levels. Out of macro statistics we note the Eurozone ZEW economic confidence indexes in the, retail sales in Canada and sales of existing homes in the U.S.