Kuroda Adds Fuel To Yen Sell-Off, Stealing Show From Hawkish RBA

There was already good demand for USD/JPY ahead of the Tokyo open, with BBDXY climbing past yesterday's high in tandem with the pair. BoJ Gov Kuroda then rubbed salt into the yen's wounds as he reaffirmed commitment to ultra-loose monetary policy centred around the YCC framework and noted that tightening remains a distant prospect. A barrage of comments from Japanese financial officials stressing the importance of stability in FX markets did little to help the yen.

• Spot USD/JYP refreshed its two-decade highs, running as high as to Y132.75 at one point, as the Japanese currency cemented its position as the worst G10 performer. With the spot rate creeping higher, further topside momentum emerged behind USD/JPY 1-month risk reversal, which swung above parity on Monday. Demand for calls has been building anew since mid-May, when that risk reversal reached its most bearish levels since March.
• Yen weakness stole the limelight from the much awaited RBA monetary policy decision. Australian policymakers wrongfooted markets with a half-point hike to the cash rate target, even as sell-side consensus called for a 25bp move. The resultant bid in AUD was generally rather short-lived. Both AUD/USD and AUD/JPY promptly unwound their post-RBA gains, although AUD/NZD remained on the front foot after lodging a new four-year high.
• U.S. trade balance & German factory orders as well as comments from Riksbank's Ingves & ECB's Wunsch take focus from here.