Hawkish Powell Boosts Greenback, Yen Breaches Round Figure En Route To Six-Year Low

USD/JPY was bought into the Tokyo fix, printing above Y120.00 for the first time since early ’16 in the process. Note that several market participants flagged broken barrier options at the Y120.00 level. A brief pullback below that round figure was followed by another round of purchases, which took the pair as high as to Y120.47. BoJ policy divergence vs. wider developed market central banks, Japan’s notable reliance on energy imports (and the surge in related prices in recent weeks, resulting in diminished terms of trade for Japan) and the well-documented cheapening in U.S. Tsys (higher Tsy yields) have been the dominant inputs into price action for the cross during early ’22.

• EUR/JPY punched through the Y132.00 figure as it rose to the highest point since Feb 11, bringing Feb 10 cycle high of Y133.15 into view.
• The Antipodeans advanced, with a surge in AUD/JPY capped by a resistance zone located slightly above the Y89.00 mark and representing a series of intraday highs from January 2018.
• The greenback caught a bid as the Asia-Pacific digested latest comments from Fed Chair Powell, who flagged the possibility of a half-point rate hike if necessary. His hawkish posturing helped reinforce the perception that U.S. policymakers were determined to contain rising consumer prices.
• The PBOC fix fell virtually in line with expectations. China's central bank set the midpoint of permitted USD/CNY trading band at CNY6.3664. Spot USD/CNH edged higher while staying within yesterday's range.
• Central bank speak takes focus today, in the absence of notable data releases. Comments are due from ECB's Lagarde, Lane, de Guindos, Villeroy & Panetta, Fed's Williams, Daly & Mester as well as Riksbank's Ingves & Skingsley.