EURGBP TECHS: Resistance Remains Intact

• RES 4: 151.91/95 High Nov 13 / High Oct 1 ‘22 and major resistance
• RES 3: 151.43 High Nov 16
• RES 2: 150.89 High Feb 13 and bull trigger
• RES 1: 1150.37 Intraday high
• PRICE: 150.29 @ 05:25 GMT Mar 19
• SUP 1: 148.41 50-day EMA
• SUP 2: 147.44 Low Mar 14
• SUP 3: 146.49 Low Mar 08 / 11 and key support
• SUP 4: 145.90 Low Feb 1

USDJPY is trading higher today following this morning’s BOJ announcement. The extension strengthens a short-term bullish condition and the USD has cleared a number of short-term resistance points. The move above 150.00 signals scope for a test of key resistance and the bull trigger at 150.89, the Feb 13 high. A break of this level would resume the uptrend. Key support lies at 146.49, the Mar 8 / 11 low. Initial support is at 148.41, the 50-day EMA.

The BBDXY sits up close to 0.15%, last near 1239.4. Gains of close to 0.50-0.60% have been recorded against both JPY and AUD.

• The main focus was on the BoJ outcome. In the event, the central bank removed NIRP and raised rates to 0.0-0.1%, while it also abandoned YCC, but kept bond purchases largely unchanged.
• Importantly, the BOJ stated it will make "nimble responses," increasing its purchases, should long-term interest rates rise." Also, given the current outlook for economic activity and prices, the BOJ anticipates that accommodative financial conditions will be maintained for the time being," the board said.
• The bond purchases point and still accommodative policy settings has weighed on the yen. From near 149.30 prior to the outcome, we have spiked close to 150.00, holding close to this level in recent dealings. Note BoJ Ueda's press conference is due later at 3:30pm Japan time.
• For the AUD, the RBA removed its language around further rate hikes can't be ruled out, instead replacing it with the board would not rule anything in or out. RBA Governor Bullock is currently holding her press conference, but largely reiterating what the earlier statement said.
• Governor Bullock played down any shift to neutral. Still, AUD/USD is close to session lows, last near 0.6530, off nearly 0.50%. Weaker equity tones in HK and China have has also likely weighed.
• NZD/USD has been dragged lower, last near 0.6060/65, off around 0.35%. The AUD/NZD cross has moved away from recent highs of 1.0795 to 1.0765/70.
• Looking ahead, there are US February housing and Canadian CPI data. ECB’s de Guindos speaks today too.

JGB futures are higher, +13 compared to settlement levels, after initially gapping lower on news that the BoJ had ended its negative interest rate policy (NIRP) and scrapped Yield Curve Control (YCC).

• The BoJ hiked rates to 0.0% (lower bound) to 0.1% (upper bound) from negative territory. This is the first rise in interest rates since 2007.
• The short-term rate will now be the primary monetary policy tool. Still, the central bank expects financial conditions to remain accommodative.
• In terms of votes it was 7-2 to raise rates (to 0-0.1%), while JGB purchases will continue largely as before (in 8-1 vote). Currently the bank purchases around 6trln yen per month. It was a unanimous vote to end ETFs and J-REITS purchases. The bank will also gradually reduce the amount of CP and corporate bond purchases (looking to end such purchases in a year).
• On the economy, the virtuous cycle between wages and prices has become more solid, thereby signifying the price stability target would be achieved.
• The cash JGB curve has maintained its twist-flattening, pivoting at the 2s, with yields 1bp higher to 2bps lower. The benchmark 10-year yield is 2.4bps lower at 0.743% versus its YTD high of 0.801%.
• The swaps curve has twist-steepened, with rates 2bps lower to 2bps higher. Swap spreads are mostly wider.
• Tomorrow, the local calendar is empty.