EUR: Seeing Broader Demand

PMI details from the press release below with input prices showing a broad increase. Although as we cautioned with the flash release, the PMIs give no indication of how big price rises are, only that almost 50% of firms saw input price increases. These could have been relatively small or larger increases - there's no way to really tell from this data. We think tomorrow's DMP data will be more important for the DMP:

• "Average input costs rose at the quickest pace since October 2022, mainly reflecting spikes in the prices of energy, oil, gas and other associated costs. Almost half of companies (49%) reported an increase in purchase prices, while only 2% saw a decrease. The seasonally adjusted Input Prices Index rose by 15 points month-on-month, its second-steepest gain since the survey began in January 1992 (beaten only by October 1992 in the aftermath of the UK's withdrawal from the ERM)."
• "Average vendor delivery times lengthened to the greatest extent in over four-and-a-half years, with a quarter of panellists reporting an increase in lead times compared to only 2% reporting a decline."
• "March data suggested that demand held up comparatively well in the face of rising market uncertainty. New orders rose for the fourth successive month, albeit at a slower pace than in February, while new export business also continued its recent upturn. There were reports of a rise in new orders from the US, Europe, mainland China, APAC and Brazil."

• MNI: UK MAR FINAL MANUF PMI 51.0 (51.4 FLASH, 51.7 FEB)

These comments from the new BoJ board member Asada are notable for the BoJ path on policy rates this year (53bps of hikes currently priced, 75bps were priced very briefly late last week).

• Asada's views on oil prices are no real surprise (rising oil prices raise stagflationary risk), but he is clear that monetary policy alone is insufficient to address this, and a fiscal response is required to co-work with the BoJ policy to "control" the economy.
• Asada joins the BoJ from Chuo University and has written at length in favour of aggressive fiscal spending, replacing Noguchi today for a five-year term. He is expected to form a 'reflationist' wing on the BoJ board alongside Sato set to join in June - although is far less forthcoming on policy rate views today, and stresses the BoJ does not target FX, and is not in a position to say whether a strong or weak currency is "good".
• USDJPY's pull off highs will be a relief for Japanese policymakers, although clashes slightly with Asada's reflationary stance - and Trump's de-escalatory rhetoric should mean the pace of JPY weakness slows, keeping authorities well clear of any pressure to intervene in FX. This keeps the downside in USDJPY of note, and the current intersection of the 50-dma and the 100-dma is a signal that the dominant uptrend posted off the January low, while still present, is slowing. Initial firm support to watch lies at 157.42, the 50-day EMA.