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Bank of Japan Keeps Rates Unchanged – Nikkei 225 Retreat


Nikkei 225 index trades lower today as the central banks take center stage. Bank of Japan and Federal Reserve kept the interest rates unchanged as expected by markets. The yen climbed to seven-week highs after the Fed’s decision and the exporters in Nikkei 225 felt the pressure. 

Bank of Japan Keeps rates Unchanged

Bank of Japan kept the rates at -0.1% as was widely expected by markets in the first policy meeting under the Yoshihide Suga administration. The central bank also kept the monetary stimulus unchanged. Bank of Japan said that the economy is improving and there is an improvement in exports and consumption.

Fed Now Sees Stronger Rebound 

The Fed yesterday kept the rates unchanged and said that it would continue with low rates until the inflation moves above the 2% target. Fed will keep the current pace of bond buying at $120 billion per month. Fed revised its projections for the economy upward. The Fed now expects the U.S. economy to shrink by 3.7% in 2020 below the previous forecast of a 6.5% contraction. The unemployment is expected at 7.6% now the previous forecast was at 7.6%. 

Nikkei 225 Technical Levels

Nikkei 225 ended 0.67% lower at 23,319 as the index hovers close to six-month highs. Positive momentum remains despite the correction in the last two days. 

Strong support for the index is at 23,000, while a break below might test the 50-day moving average at 22,895 the 50-day moving average. If the sellers break below that support, then the next target would be 22,600 the low from August 28. 

On the upside, resistance for Nikkei 225 stands at 23,446 today’s high. More selling pressure expected at 23,585 the high from September 14. 

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Nikkei 225 Daily Chart