JPY: USD/JPY Surges Post BoJ, Earlier Apr Highs In Sight
USD/JPY has continued to rebound post the BoJ meeting outcome. We did have a few brief moves to 133.40 (based off BBG GIP) prior to the announcement but these weren't sustained. The pair last around session highs at 134.80.
- The outcome is largely in line with earlier Nikkei reports (and our own preview), the BoJ removed reference to Covid in its forward guidance. It also removed reference to rates in terms of the guidance (expecting rates to remain at low or present levels was left out), but the Bank left in that is prepared to take further easing measures if necessary. The BOJ will also conduct a review, which is expected to take 1 to 1.5 yrs.
- Keeping the reference for potential further easing may disappoint the market around any prospects of a shift in the policy stance at the next meeting.
- For USD/JPY bulls, the Apr 19 high of 135.13 is not too far away. Also note the simple 2100-day MA is just under 137.00.
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RBA: VIEW: NAB: Monthly CPI Of Some Comfort
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BONDS: NZGBS: At Cheaps With Curve Flatter
NZGBs closed at session cheaps with yields 6-11bp higher and the 2/10 curve 5bp flatter. An e-mini-induced cheapening in U.S Tsys in Asia-Pac trade supported the move higher in NZGB yields. Cash 10-year benchmark slightly outperformed U.S. Tsys with the NZ/US yield differential narrowing 1bp to +57bp. The 10-year yield differential has traded in a 40-85bp range since mid-December.
- Swaps closed 3-11bp softer, implying a tighter long-end swap spread, with the 2s10s curve 8bp flatter.
- RBNZ dated OIS closed with pricing 1-10bp softer across meetings with November leading. Terminal rate expectations rose to 5.23% with 25bp of tightening priced for April.
- After a week-long hiatus, the local calendar sees the release tomorrow of ANZ Business Confidence (Mar) and Building Consents (Feb). The market will be focused on the pricing and cost components of the survey given that the February result continued to point to inflationary pressures. Building consents should confirm a trend softening due to a tightening in financial conditions. The data is likely to be cyclone impacted.
- With the global calendar relatively light until Friday when Euro Area CPI (Mar) and US PCE deflator (Feb) are released, the markets will be closely watching to see if global yields remain pressured by improving risk sentiment.
