Japan’s central bank expands monetary easing

The dollar index fell 1.22 per cent to 95.569.

“Markets may be disappointed that the Bank of Japan didn’t deliver more stimulus overnight – it’s probably just waiting until September, like the European Central Bank – but financials are clearly relieved that it didn’t take interest rates further negative”, said Michael Van Dulken, head of research at Accendo Markets.

LONDON, July 29 The yen soared against the dollar on Friday after a round of modest monetary policy easing from the Bank of Japan disappointed investors who had been hoping for at least a hint of more radical stimulus. Additionally, the BOJ will establish a new facility in which it lends Japanese government securities (JGSs) to financial institutions, against their current account balances with the BOJ, in order that these JGSs can be pledged as collateral for the dollar fund supplying initiative. On stocks the Nikkei has traded a wide range after the announcement and is now down 0.82%.

The yen rose to as high as 103.30 to the dollar from 105.30 in late US trade on Thursday, which market players largely attributed to the result of “fat finger” orders exacerbated by thin trading conditions as there was no apparent news to justify such a big move.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS pulled back 0.3 percent after hitting the highest level since August 11, leaving it on track for gains of 1 percent for the week, and 5.5 percent for the month.

The leading index of 300 European shares rose 0.4 per cent to 1,244 points, and Germany’s DAX also rose 0.4 per cent.

All other major currencies traded lower except Japanese yen.

The dollar was half a percent lower against a basket of its peers at 96.289, having hit set a 2-week low at 96.216.

Wall Street shares remained near all-time highs, with tech heavyweights Alphabet (Xetra: ABEA.DE – news) and Amazon rising after the bell as their earnings beat expectations. Official figures showed growth across the region halved in the second quarter of the year to 0.3 percent.

Brent crude oil futures settled down 24 United States cents to $US42.46 per barrel.

Still, while industrial output fell 1.9 per cent from the year before, it rose 1.9 per cent from the month before, with strong shipments related to homebuilding and other construction. The Tokyo core CPI fell by 0.4%, while the National core CPI fell by 0.5%.

Oil prices steadied amid short-covering after a week-long selloff and ended the month about 15 per cent lower on persistent glut concerns, with the biggest decline seen for U.S. crude in a year. Brent crude, used to price worldwide oils, gained 4 cents to $43.27 in London.

Meanwhile, the FTSE 100 trading down 0.22 percent at 6,706 by 10:40 GMT.