20.07.201711:19 Forex-elemzések és áttekintések: Global macro overview for 20/07/2017

Global macro overview for 20/07/2017:

After its two-day meeting, the Bank of Japan decided to leave the interest rate unchanged at the level of -0.1%. The interest rate has been kept at this level since the beginning of 2016 and the decision was widely expected by global investors. Moreover, the central bank also maintained its purchase of Japanese government bonds so that the 10-year JGB yield remains at 0.0%. The overall value of the bond purchase program was kept at a pace of 80 trillion Yen annually with no change. In the policy statement, the BoJ pushed back the timing of reaching their 2% inflation goal to around 2019 but raised the GDP forecast to 1.8% in 2017, 1.4% in 2018, and 0.7% in 2019.

The BoJ monetary policy has been left unchanged since last September when officials shifted their focus from monetary stimulus to yield-curve targeting.The current situation indicates that the Bank of Japan has become rather lonely in its prolonged dovishness. The BoJ's inability to reduce its massive stimulus program or follow other major central banks in shifting to a tighter policy path can be mainly attributed to very soft inflation in Japan. This situation is not likely to end anytime soon, which underlines the growing policy divergence between the BoJ and most other major central banks.

Let's now take a look at the GBP/JPY technical picture on the H4 time frame. The market has been trying to test the recent swing high at the level of 148.09 with no avail, so it fell towards the level of 145.26. The price has already bounced three times from this level, so any further sell-off might easily violate this level and head towards the next technical support at the level of 144.20.