Fed's Brainard Cranks Up Hawkish Talk, Widening Policy Gap Saps Yen

The Asia-Pacific woke up to reports of hawkish comments from Fed policymaker Lael Brainard which rattled markets on Tuesday. As a reminder, she voiced support for starting a swift balance-book reduction as soon as next month. Regional headline flow failed to offer anything that could steal attention from Brainard, even as China, Hong Kong and Taiwan returned from holidays.

• Renewed awareness of a growing Fed/BoJ policy divergence pulled the rug from beneath yen, making it the worst G10 performer. Yesterday's remarks from BoJ Kuroda, who frowned upon "somewhat rapid" moves in the yen, failed to prevent the currency from losing ground. USD/JPY added ~30 pips and had a look above the Y124.00 mark, while its RSI moved further into overbought territory.
• The greenback garnered some strength amid a relentless upswing in U.S. Tsy yields. The DXY lodged its best levels since mid-2020.
• The Aussie dollar traded on a firmer footing as 10-Year ACGB yield surged to its highest point since 2015.
• In today's most awaited risk event, the FOMC will release the minutes from their March monetary policy meeting. German factory orders and comments from Fed's Harker, ECB's Lane & de Guindos, RBA's Bullock & Kent and Riksbank's Floden are also due.