Is the Bank of Japan's easing policy at its limit?! Or is there more easing to come?!

In the UK Parliament, the extension of the Brexit deadline was passed by a majority of 412 votes in favor to 202 against. However, the pound movement was limited. It remains to be seen whether this was already priced in, or whether markets are waiting to see what will be decided at the EU Summit.

Additionally, yesterday when news spread that US-China trade talks would be postponed to April, risk-off sentiment emerged and the yen strengthened. The US-China relationship also remains far from a deal.

◎ Today's Points of Focus

1) Bank of Japan Monetary Policy Meeting

Today, the Bank of Japan's monetary policy meeting is scheduled to announce. With the Federal Reserve and the ECB shifting toward dovish stances, what will the BOJ do?

The BOJ has introduced negative interest rates, and further rate cuts seem unlikely. Also, as long as quantitative easing uses YCC (Yield Curve Control), expansion is expected to be difficult. Attention is on how the BOJ will modify its policy given rumors about the limits of easing.

BOJ policy announcements tend to be quick when there is no change and slower when there is a policy change. They have come after 11:45 when early, and after 13:00 when late. The announcement time is also noteworthy.

From 15:30, Governor Kuroda will hold a press conference. We will watch to see how he views the above topics and whether there will be any changes to forward guidance.

2) About the Brexit Deadline Extension

This morning, Parliament in the UK passed the extension of the Brexit deadline from March 29 to June 30. Given that the close of the NY market was near, we are curious how Tokyo and European markets will react. After the approval announcement, prices hardly moved, showing some pound selling but only slightly. While the extension was a positive factor, the pound’s limited movement suggests it may already have been priced in.

The focus now shifts to statements from EU leaders. Although the extension was decided by the UK, it means little unless all EU member states approve it. If even one country opposes it, the extension cannot be granted and it would be a no-deal Brexit on March 29. We will watch for any EU leaders’ statements opposing the extension.

Additionally, if markets start to re-price the possibility of a no-deal Brexit again, the pound could come under selling pressure. We will monitor leaders’ statements and the pound’s moves to gauge market pricing.

◎ Today's Event Schedule

Friday, March 15

Final day of the National People's Congress (NPC)

Premier Li Keqiang holds a press conference

Bank of Japan Monetary Policy Meeting (Day 2)

12:00 around JPYBOJ Policy Rate Announcement

15:30 JPYGovernor Kuroda's Press Conference

17:55 JPY Governor Kuroda's remarks (B20 Tokyo Summit address)

18:00 EUR Lane, President of the Finnish central bank remarks

18:00 USD IEA Monthly Report

18:00 EUR Italy HICP (Harmonized Index of Consumer Prices)

19:00 EUR Euro area CPI (Consumer Price Index)

21:30 USD NY Fed Manufacturing Index

23:00 USD University of Michigan Consumer Sentiment Index

Saturday, March 16

02:00 USD Baker Hughes Rig Count