The Bank of Japan unexpectedly raised its Policy Rate to 0.25% earlier today.

1. The Bank of Japan held a keenly anticipated policy meeting a few hours ago. Although a rate hike was considered a real possibility by analysts, the Bank was expected to hold its policy rate at 0.10%, but in fact hiked it by 0.15% to 0.25% which is its highest level since 2008. The Bank also announced that its pace of bond purchases will be halved over a 2-year period. This is a hawkish tilt, and it pushed the Japanese Yen still higher against most currencies after more than a week of already very strong gains. It also boosted major Asian equity indices, with the Nikkei 225 and the HSI each up by more than 1.5% today, and this has led other major global equity indices higher also.
2. Australian CPI (inflation) data came in as expected earlier, showing am annualized rate of 3.8%. However, the trimmed mean CPI was slightly lower than expected at a quarterly rate of 0.8%. The Australian Dollar is down today, but this is likely due more to other factors than the CPI data, although the data may have helped push the Aussie a bit lower.
3. The US Federal Reserve will be holding a policy meeting later today, at which it is expected to hold rates, but to hint strongly at a cut at the next meeting in September and to nod towards decreasing inflationary pressure in its statement. US Treasury Yields are very close to multi-month lows and will have attracted short trades by trend traders.
4. In the Forex market, since today’s Tokyo open, the New Zealand Dollar has been the strongest major currency, while the Australian Dollar has been the weakest. The Japanese Yen is also strong after the Bank of Japan’s rate hike earlier.
5. Bitcoin appears to have found some support earlier at the round number of $66,000.
6. Gold has continued to rise, reclaiming about half of its recent loss since it reached a record high earlier this month.

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