The Japanese Yen dips broadly after BoJ kept policy rate at -0.1% but revamped the framework of the stimulus program as a comprehensive review. The central bank introduced a new term "QQE with Yield Curve Control". BoJ will control short-term interest rate with -0.1% negative interest rate. Meanwhile, long-term interest rate will be controlled by the asset purchase, maintained at JPY 80T annually. Meanwhile, BoJ left open options for additional easing with firstly, cutting of short-term interest rate and secondly, adjusting the target level of a long-term interest rate. Expansion of asset purchases and acceleration of the pace would also be considered. Nikkei responses well to the announcement and is trading up 1.4% at the time of writing. Meanwhile, yen is under mild selling pressure.
FOMC rate decision will be the next major focus of the markets. Fed is widely expected to stand pat and keep the target range of federal funds rate at 0.25-0.50%. Nonetheless, there are a couple of things to watch that could move markets. Firstly, all traders will be looking for signal of a December rate hike. Judging from recent comments from FOMC members, the majority is expecting another hike this year. Fed fund futures are also pricing in nearly 60% chance of December hike. Fed chair Yellen might make use of the press conference to affirm such expectations. Secondly, Fed will be releasing updated economic projections. Attention will without a doubt be on the so called "dot plot" which indicates policy makers' view on rate path. Thirdly, the updated forecasts on inflation, growth and unemployment will be scrutinized for the consistency with the dot plot.
DJIA is struggling in tight range after dipping to 17992.21. We're holding on to the view that a short term top is at least formed at 18668.43 and correction from there isn't completed yet. This view is supported by the sustained trading below 55 days EMA. A break of 17992.21 will extend the fall to 38.2% of 15450.56 to 18688.43 at 17439.20. The key level to watch is indeed 17063.08 and firm break there will raise the chance of medium term correction through 15450.56.
Elsewhere, Australia Westpac leading index rose 0.0% mom in August. UK public sector net borrowing, Canada wholesale sales and US crude oil inventories will be released later today.