BOE s inflation report today

The yen has been the main focus this week after hitting seven-year lows, breaking 116.00 yesterday, after comments on a sales tax delay and a snap election to be called by Kuroda.  Overnight it seemed that we were heading that way again as USD/JPY broke the 116 level for a second time as Kuroda says he is not worried about hyper-inflation as a result of aggressive monetary easing.  This momentum fell short again as Japan’s Cabinet Secretary Suga’s comments hit the wires, suggesting that there is no decision to postpone the sales tax or have a snap election. This gave the yen some strength for the rest of the Asian session, USD/JPY now trading below 115.50.

Today’s main event will be the BoE’s inflation report and Governor Carney speaking. the expectations for the report to reinforce the expected rate rise  in mid-2015, but with this an expected dovish tone due to the latest GDP data for Q4 coming in at 0.6% of growth;0.2% lower than predicted, so some downward revisions could be in the report.  The other concern for the BoE will be the wage growth data which is to be released an hour before the report with an expected uptick to 0.9% from its previous 0.7%. This may help in the path of the rate rise if on track and increasing.  GBP/USD is currently trading above 1.5900.

The euro gained back some ground yesterday as it did most against a weak USD from the holiday.  It has started very much flat so far with no direction as of yet but holding it gains from yesterday, with very little data out to guide it today it seems to be in the hands of the USD.  It’s currently trading just below the 1.2500 level.

EUR/USD

Supports  1.2450 1.2400 1.2355   | Resistance 1.2510 1.2550 1.2575

USD/JPY

Supports 115.00 114.50 113.80  | Resistance 116.05 116.45 116.80

GBP/USD

Supports 1.5870 1.5825 1.5785  | Resistance 1.5950 1.5990 1.6025