Across Asia and Europe stock indices are trading on a stronger footing as bullish sentiment pervades ahead of the release of the minutes from the last FOMC meeting, an announcement which is sure to set the tone for trading in the balance of the day. On the back of a GDP number in Japan that beat expectations, the Nikkei 225 rose nearly a percent to hit 15 year highs while the yen saw a corresponding decline as the content of the GDP indicated some core areas of weakness in the Japanese economy that market participants believe raised the possibility of further easing on the part of the Bank of Japan at its next meeting in July. In Australia, consumer confidence bounced in the wake of the RBA’s earlier rate cute; however, the impact on the aussie dollar has been muted as it is trading weaker against a greenback which is broadly stronger.
The story of the euro’s slide continues from yesterday as the market continues to consider the implications of the ECB’s bond buying activity and what that means for the variation in yields between the United States and Europe. The higher yields found in USD denominated assets has once again enticed capital into the US with the euro sliding nearly a full cent against the greenback in the last 24 hours. Elsewhere in Europe the sterling is on a stronger footing versus all its major pairs and showing notable strength versus both the euro and the yen. This is largely a reflection of the market’s response to the Bank of England’s meeting minutes today which signalled that despite robust job and wage growth rates will remain at their historically low levels for at least the short term. This release comes on the back of news yesterday that the British economy had slipped into deflation for the first time since the 1960s, a news item which greatly reduces the likelihood of a more restrictive shift in BoE policy at least for the time being.
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