Bank of Japan interest rate decision, oil and currencies
SINGAPORE — Shares in Asia-Pacific looked set for a lower start on Friday, following sharp declines on Wall Street as investors weigh the possibility of aggressive monetary policy tightening leading to a recession.
Futures pointed to a lower open for Japanese stocks. The Nikkei futures contract in Chicago was at 25,750 while its counterpart in Osaka was at 25,670 — against the Nikkei 225’s last close at 26,431.20.
Australian stocks also looked set to open lower, with the SPI futures contract at 6,325, against the S&P/ASX 200‘s last close at 6,591.10.
Shares on Wall Street fell sharply overnight, with the S&P 500 dropping 3.25% to 3,666.77. The Dow Jones Industrial Average shed 741.46 points, or 2.42%, to 29,927.07. The Nasdaq Composite lagged, falling 4.08% to 10,646.10.
Bank of Japan rate decision ahead
The Bank of Japan is set to release its monetary policy statement at 11:00 a.m. HK/SIN on Friday.
“We do not expect the BoJ to dump its 0.0% +/‑25bp yield target on the ten year Japanese government bond. Japan’s underlying inflation impulse is weak at around 1%/yr,” Joseph Capurso, head of international economics at Commonwealth Bank of Australia, wrote in a Friday note.
“If the BoJ keep monetary policy unchanged, the JPY and Japanese swap rates and yields on JGB futures are likely to correct sharply lower,” Capurso said.
Ahead of that decision, the Japanese yen traded at 132.61 per dollar, stronger as compared with levels above 134 seen against the greenback earlier this week.
The Japanese central bank’s decision comes on the back of monetary policy tightening by global peers earlier this week, with the U.S. Federal Reserve, Bank of England and Swiss National Bank all announcing rate hikes.
Currencies
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.631 after a recent drop from levels above 105.
The Australian dollar changed hands at $0.7043 after a recent bounce from levels below $0.702.
