Hawkish BoE Speak Supports Sterling, Yen Turns Its Tail

The yen tumbled in Asia amid a strong showing from the Nikkei 225, as PM Kishida brushed away earlier speculation that he might raise capital-gains and dividend taxes. The broader inflationary concerns helped sap strength from JPY, as Japan's consumer prices are struggling to return to growth, inspiring a growing divergence in the outlook for the BoJ's policy action versus its major peers.

• USD/JPY punched through resistance from Apr 24, 2019 and rallied to its highest point since Dec 18, 2018 as the yen landed at the bottom of the G10 pile.
• Sterling received a boost from hawkish BoE rhetoric, as Gov Bailey expressed a sense of discomfort with accelerating inflation, while MPC member Saunders warned that UK households should prepare for "significantly earlier" rate hikes.
• GBP/JPY went bid and printed its best levels since Jul 6, after breaching its 100-DMA and forming a double bottom pattern into the back end of last week.
• Commodity-tied AUD, NOK and CAD were in demand amid a relentless rise in commodity prices. The NZD lagged behind its high-beta peers, AUD/NZD resumed attacks at its 100-DMA.
• South Korean and Taiwanese markets were shut in observance of public holidays in those countries.
• Italian industrial output, Norwegian CPI and plenty of ECB speak take focus from here, with little of note slated for NY hours owing to market holidays in the U.S. and Canada.