JPY Wobbles As Officials Watch It With "Vigilance," AUD Advances

Official jaw-boning caused some perturbations in JPY price action. The yen went bid after Japanese Finance Minister Suzuki called sudden FX moves "undesirable" and said that the government would monitor their impact with "vigilance," in what arguably represented marginally firmer rhetoric on the matter than before. Suzuki's comments fell on fertile ground as market participants are on the lookout for hints on officials' tolerance threshold when it comes to yen depreciation after USD/JPY punched through the Y125.00 figure on Monday. A recent analytical piece from ING suggested that the pair could run as high as to Y130.00 without provoking an intervention.

• The dip in USD/JPY was short-lived and the rate quickly returned to neutral levels, with participants assessing the balance of risks to the yen. They weighed the growing uneasiness of officials about rapid yen depreciation against the familiar prospect of Fed/BoJ divergence. Implied USD/JPY volatilities rose across the curve.
• The Aussie dollar outperformed after NAB Business Conditions jumped 9 points to 18 in March, pointing its largest monthly increase since mid-2020.
• Offshore yuan crept higher, defying the headwinds of China's dire Covid-19 situation and a slightly weaker than expected PBOC fix.
• U.S. CPI headlines the global data docket today, with German ZEW Survey & UK jobs market report also due. Fed's Brainard is the only major central bank speaker.