Aug 10
31
BOJ eases policy as yen climbs
International Market Report 31st August 2010
The benchmark Nikkei dropped 277.40 points to close at 8,871.86, the Topix lost 2.6% to close at 807.46. The Dow Jones was 164 points higher at 10,150, whilst the Nasdaq gained 34 points to 2,153. The S&P 500 added 17 points at 1,064.
Yesterday, the BOJ boosted its cheap loan scheme, bowing to government pressure for action to protect a fragile recovery by curbing the yen’s rise, on the other hand cabinet ministers signaled they may intervene to weaken the currency. The yen surged more than 1% against the dollar after the central bank beefed up the supply of fixed-rate loans to banks, a move investors saw as a symbolic gesture that will do little to halt a climb in the currency. Government officials who were increasingly alarmed by the yen’s rise that took it to a 15-year high against the dollar last week, have tried to talk down the currency while leaning on the central bank to help by further easing its policy. Yesterday, US stocks accelerated declines after comments from US President Barack Obama did little to soothe investors anxious over the slowing pace of the recovery. Obama has stated that he and his economic team discussed additional steps to promote economic growth, including looking at tax cuts for businesses. Stocks had been trading lower prior to the comments and the losses picked up steam.
The Dow Jones industrial average dropped 140.92 points, or 1.39 per cent, to around 10,009.73. The American president also said the US economy was not expanding quickly enough and there was no magic solution to fix its problems. Gloomy reports on GDP and housing have raised fears the fragile economy could slip back into a recession or face a lengthy period of growth that is too slow to make significant a dent in the 9.5% unemployment rate.
Due for release today is the AUD Building Approvals m/m, AUD Retail Sales M/m, CAD GDP m/m, USD CB Consumer Confidence and USD FOMC Meeting Minutes.
