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JPY Backtracks Amid Positive Equity Picture

FOREX
  • The JPY is backtracking early Wednesday, taking the place as the weakest currency in G10. Equities are furtively higher, with strength in French stocks tipping the CAC-40 to a fresh alltime high. USD/JPY hit the week's best levels of Y134.05 in Asia-Pac trade and is holding in positive territory ahead of the NY crossover.
  • Elsewhere, markets are more muted, with the EUR and USD putting in a mixed performance and largely treading water ahead of the key US inflation release.
  • SEK trades firmer against most others in G10, absent any macro drivers, to keep NOK/SEK within range of key support at 0.9823 ahead of the YTD low and bear trigger of 0.9725.
  • Focus rests on the US CPI release due at 1330BST/0730ET, with markets on watch for any confirmation that a May 25bps rate hike could be the last of the cycle. Consensus looks for Y/Y CPI to slow to 5.1% from 6.0%, although core is expected to tick higher to 5.6% from 5.5%.
  • FOMC minutes are also on the docket, at which markets will look to gauge the impacts of recent banking instability on the potential Fed policy path.

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