INDIA: Sharp Acceleration in GDP Growth Expected in 1Q25

OI data points to a mix of net long setting (FV, UXY & US) and short cover (TU, TY & WN) during yesterday’s rally.

• The positioning swings largely offset in curve-wide terms, leaving a modest bias towards net long setting.

• Lower US yields this week prompted a resumption of USDJPY weakness, exacerbated by the bearish technical conditions and 144.00 capping the recovery well. Weaker-than-expected US data on Tuesday saw USDJPY test 142.00 a couple of times before potential month end related flows, position squaring ahead of US GDP and stability for global equities have proved supportive.
• Weaker-than-expected IP and retail sales data from Japan may also be providing a USDJPY tailwind, as the pair has been steadily grinding higher across the APAC session and through the European morning. 20-day EMA resistance has moved down, coinciding with last week’s highs around the 144.00 mark. Support is seen at 141.97 and 141.49, the Apr 23 low.
• US GDP & ECI, MNI Chicago PMI and PCE will provide the primary impulse for USDJPY Wednesday, however, the close proximity to month-end and Thursday’s BOJ decision may provide obstacles to a meaningful breakout.
• Given the significant shifts in external conditions, particularly the U.S. tariff policy changes since the last MPM in March, the BoJ is likely to adopt a cautious, wait-and-see stance at this meeting. Our full preview with analyst views is here: https://mni.marketnews.com/42YfUk9

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