Only two days before the Bank of Japan meeting which will set Japanese economic policy for the immediate future, Japanese President Shinzo Abe defended his aggressive economics policies. Abe’s efforts, dubbed Abenomics in the press, endeavored to address the monetary, fiscal and structural policies of the country’s economy which has long been plagued with high debt and economic deflation. Detractors claim that Abenomics hasn’t made a notable impact on the country’s struggling economy, though Abe emphatically denied these claims, stating in an address at the Pierre Hotel on Monday that "There is no doubt that Abenomics has improved Japan's investment climate.”
The BoJ’s two-day policy meeting is set to start on Wednesday and is expected to move global markets even more than the U.S. Federal Reserve meeting that will take place concurrently. Analysts are continuing to speculate whether the BoJ will cut interest rates, bringing them deeper into negative territory or whether it will adjust its bond-buying program, a move which is likely to steepen the yield curve and shake the global bond market with volatility.
Market Movements
The euro held steady during Tuesday’s Asian session at $1.1172, far above Monday’s low of $1.1149. The dollar index which tracks the U.S. dollar against six major currencies was at 95.874, slightly lower than it was at the end of last week. The dollar also hit a six-day low against the yen, falling to 101.56 before ending the day at 101.90.
Oil prices also fell on Tuesday following Venezuela’s announcement that global supplies would need to be cut by 10 percent in order to bring production down to consumption levels. WTI crude oil was looking to test support levels at $42.72, after which a fall towards $42 could be possible, speculated Reuters analyst Wang Tao.