Hurricane Sandy remains the focus as the BOJ expand asset purchases

Hurricane Sandy remains very much in the markets spotlight as at least twelve storm-related fatalities were reported with large areas of Manhattan without electricity and underwater. There has been reports of an explosion at a power plant on the east side of Manhattan whilst the US Nuclear Regulatory Commission has also declared an alert at the country’s ageing nuclear power plant in New Jersey due to rising water levels. The costs to repair the infrastructure is estimated to be in excess for $20 billion but despite this equity markets and the risk trade are trading constructively with some markets participants seemingly having the view that the damage could have been a lot more severe.

The BOJ left rates unchanged but increased the size of it’s asset buying and lending programme by 11 trillion JPY to 91 trillion. This was slightly more than the market had expected at JPY 10 trillion although there had been rumours in the media that Japanese politicians had been asking the BOJ for JPY 20 trillion. The BoJ reiterated its policy message that it will continue to pursue an easing policy until inflation reaches its 1% goal.

In the US the Case-Shiller house price index is expected today whilst the October consumer confidence print (originally scheduled for today) has been delayed until Thursday with rumours circulating that this Friday’s US employment report could be delayed until after the US Presidential election.

EUR/USD

Supports 1.2875-1.2835-1.2805 | Resistance 1.2980-1.3020-1.3080

USD/JPY

Supports 79.00-78.80-78.45 | Resistance 79.80-80.00-80.15

GBP/USD

Supports 1.6025-1.6000-1.5975 | Resistance 1.6100-1.6145-1.6185