Forex Trading

Japan’s government unveiled a new fiscal stimulus plan worth 15 trillion yen ($154 billion) aimed at boosting the world’s second-largest economy amid deepening recession. The massive outlay amounts to 3% of total output and brings the total spent to revive growth to 25 trillion yen.

Key Overnight Developments

• Japan Announces 15 Trillion Yen in New Stimulus Spending
• Japan's CGPI Saw Producer Prices Fall By Most in 7 Years
• Euro, British Pound Slip Lower Against US Dollar

Critical Levels



The Euro slipped as much as -0.5% against the US Dollar in overnight trading. The British Pound fell to test as low as 1.4604 but prices recovered late into the session to yield an effectively flat result. On balance, the greenback oscillated in a narrow 0.3% band against a basket of six top currencies.

Asia Session Highlights



Japan’s wholesale inflation fell more than economists expected, with the Domestic Corporate Goods Price Index shedding -2.2% in the year to March versus expectations of a -1.8% result. The reading is the lowest in nearly 7 years and points to further downward pressure on consumer prices (the benchmark inflation gauge) as firms pass on lower manufacturing costs via cheaper finished products. The current downturn could substantially accelerate if expectations of falling prices become entrenched, encouraging consumers and businesses to perpetually put off spending and investment waiting for the best possible bargain.

Meanwhile, the government unveiled a new stimulus plan worth 15 trillion yen ($154 billion) aimed at boosting the world’s second-largest economy amid deepening recession. The massive outlay amounts to 3% of total output and is the third measure of its type introduced by the administration of Prime Minister Taro Aso, bringing the total spent to revive growth to a whopping 25 trillion yen. The current proposal calls for spending on low-carbon “green” technology, expanded employment measures, and subsidies for new car purchases.

Euro Session: What to Expect



European markets are closed for the Easter Monday holiday, clearing the calendar of any economic releases and likely thinning out liquidity as traders turn their eyes away from price action. Trading is likely to remain muted heading into the US session, though caution is warranted as limited market depth may amplify price swings from any unexpected development. Technical positioning sees the US Dollar setting up to challenge the major currencies after losing as much as 7.8% on average since early March.

Written by Ilya Spivak, Currency Analyst
Article Source - Japan Announces 15 Trillion Yen in New Stimulus Spending (Euro Open)