Surprise BOJ Action Impacts Markets

Tuesday, December 20, 2022-- Mptrader Pre-Market Update: The BOJ apparently cracks open the door to freely floating benchmark 10 year interest rates for the first time since 2016 (in other words, a potential end to QE forever to combat rising inflation in Japan). Overnight, the BOJ expanded the ceiling on 10-year rates to 0.50% from 0.25%, which might not seem like much, but it IS a doubling of the upper rate the bond can climb before "the authorities" intervene to buy paper to put a lid on rising benchmark yield.

Who cares? Good question. Apparently, the markets do because the Dollar instantly nosedived versus the YEN (see my attached Hourly Dollar vs. YEN chart as well as my Big Picture DXY Daily Chart that shows renewed pressure on the Dollar), which has positively impacted the precious metals and Oil (denominated in Dollars)... 

The surprise BOJ action also impacted equity futures markets overnight. ES initially spiked down to a new reaction low at 3803.50-- right into my next optimal target zone of 3800 to 3820, from where it has recovered to a pre-open high at 3850, which has the right look of an important technical low off of the 4180 high last Tuesday... Chart work for ES is next...