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Japanese investors cautious ahead of BoJ announcement

The spot gold price inched higher during Asian trading hours on Friday after stimulus measures announced by the Bank of Japan disappointed the market in its magnitude. Australia's S&P ASX 200 was down 0.1 percent at 5,556.00.

Financial markets seemed underwhelmed by the central bank's modest action.

At a two-day monetary policy meeting that ended on the day, the Bank of Japan Policy Board decided by a vote of seven to two to expand the central bank's annual purchases of exchange-traded funds, or ETFs, to ¥6 trillion from ¥3.3 trillion.

Still, the dollar later rose back above ¥103.50 thanks to a wave of short covering prompted by a rebound in Tokyo stocks toward the close, market sources said. Official figures showed growth across the region halved in the second quarter of the year to 0.3 percent.

The Nikkei stock fell almost 2 per cent in afternoon trade.

Syria rebels down Russia copter
The United Nations , for example, found that sarin gas was used in Eastern Ghouta in 2013, killing about 1,429 people. The route used by regime forces and civilians living in government-controlled parts of Aleppo runs through Ramussa.

Looking ahead, it will be interesting to see if this BOJ disappointment has a more sustained negative impact on risk assets, and the market will continue to digest the implications of the event risk for the remainder of the day.

Investors were hoping for a bigger increase in monetary stimulus, pushing the yen higher against move major currencies - a U.S. dollar was worth 104.5 yen before the announcement, but 102.8 shortly afterwards.

However, analysts opine that BOJ has very few choices and might have to match the government's hefty spending plans.

"Kuroda ordered a review of the effectiveness of policy for the next meeting, which will keep easing expectations alive, but in our view not sufficiently to stop the trend of yen strength reasserting itself", said Adam Cole, head of G10 FX Strategy at RBC Capital Markets in London. Japanese Prime Minister Shinzo Abe has announced 28 trillion yen ($266 billion) in extra government spending to jumpstart growth, but details are uncertain. The BOJ said its own action today would have synergy benefits with government measures.

Unemployment fell to 3.1 per cent in June from 3.2 per cent for the past several months.

Another problem for oil: Summer gasoline demand disappointed, says analyst
Supplies rose to 521.1 million barrels through July 22, keeping them more than 100 million barrels above the five-year average. Trade group American Petroleum Institute ( API ) said yesterday that U.S. oil stockpiles fell 1.34m barrels last week.

"While the increase in ETF purchases is helpful, it still makes up a very small part of the overall easing package", Cole said, noting that the BOJ has left the door open to more easing but will be unable to prevent the yen from rallying further.

The BoJ kept the benchmark policy rate at -0.1 per cent at the meeting and maintained its monetary policy base at ¥80trn per year. The median inflation projections for the CPI were revised down to 1.7% in 2017 and 1.9% in 2018.

The euro stood little changed at $1.1084. Wall Street was poised for a subdued opening too with Dow futures and the broader S&P 500 futures down 0.1 percent.

Worldwide benchmark Brent crude futures dropped 0.1 percent to $42.64.

Indian parliament passes historic tax reform bill
The government, however, is confident that few opposition parties, barring the Congress, will make much of an issue out of it. The GST will have a central component, and a state component, which both forms of government will administer at their levels.



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