ASIA: Government Bond Issuance Today

The USD/JPY range overnight was 158.02-159.65, Asia is currently trading around 158.40. The pair again looked destined to have a look above the 160 area but the huge reversal in the USD thanks to Trump has seen it fail once more up there. The market will now be looking for details on this potential end to hostilities and until we get a clear off-ramp I suspect the market will be cautious. On the day, the first support is back toward 157.50 and then the more important 156.50 area. Yen Bears will be disappointed with the price action but still hoping for a test of the 160-162 area at some point.

• MNI BRIEF: Japan's Unions Report 5.26% Wage Hike Vs. 5.46%. Major companies concluded their negotiations -- known as shunto – last week, and are expected to offer wage increases of 5% or more for a third straight year. BOJ Governor Kazuo Ueda said last week that wage-hike trends seems to be solidly taking shape, though a major focal point going ahead will be the scale of wage hikes at smaller firms. 
• Options : Close significant option expiries for NY cut, based on DTCC data: 156.00($603m),158.00($1.93b). Upcoming Close Strikes : 155.00($1.16b March 26), 158.00($2.72b March 25) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 115 Points
• Data/Event : Natl CPI, S&P Global Japan PMI’s, Nationwide Dept Sales YoY

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Earlier this morning RBNZ Governor Breman gave a speech: "Global shockwaves to Kiwi shores: The impact of the Iran conflict on New Zealand" Some key snippets were: "“We are likely to see higher headline inflation over the near term, and somewhat weaker growth momentum,” Governor Breman says, along with (in terms of the policy outlook/balance): “Getting this judgement right is key to avoiding reacting too early to near-term inflation pressures that monetary policy can do little about – or reacting too late if above-target inflation becomes embedded in the economy,” Governor Breman says.

• Westpac notes that it is unlikely to bring forward RBNZ hikes in the near term, with key focus on second round inflation effects: "The key takeout is the RBNZ will look through the near-term first round impact of the oil shock on inflation and is therefore very unlikely to quickly jump to rate hikes. Rather, rate hikes will only be brought forward should there be an accumulation of evidence suggesting that the oil shock is generating second-round pressures on wages and prices, leading to higher inflation over the medium term. Those second-round effects – which are more likely to occur if the conflict is prolonged – are unlikely to be evident for some time."
• It adds: "It’s unlikely the RBNZ will be raising rates in the next 6 months. It’s going to take time to work out how long this shock lasts, the impact on the economy and excess capacity and the implications for medium-term inflation pressures. OCR cuts similarly look unlikely while this assessment is being made."
• Note the next RBNZ meeting is on Apr 8, which will also be followed by a press conference by Governor Breman, per the new RBNZ format. 

Source: Bloomberg Finance L.P./MNI