Post-Fed Reprieve Extends To Asia, Yen Underperforms

Better risk appetite is sapping strength from safe-haven currencies, as the Asia-Pacific reacts to the Fed's 75bp rate hike delivered on Wednesday. Despite it being the largest rate rise since 1994, Chair Powell described it as "unusually large" and said he does not "expect moves of this size to be common."

• The yen paces losses in G10 FX space as U.S. Tsy yields edge higher again, while focus turns to this week's BoJ meeting, with Gov Kuroda et. al expected to keep policy settings unchanged. Measures of implied volatility for the yen remain very elevated, even with Fed announcement already in rearview mirror.
• That said, technical signals and options markets suggest that a correction might be in store for USD/JPY. Its RSI returned from overbought territory, as the spot rate plunged post-Fed, while 1-month risk reversal extended its sharp retreat, indicating strengthening bearish bias.
• Antipodean currencies have garnered some strength, with the NZD swiftly recouping its dip from after the release of below-forecast Q1 GDP data out of New Zealand. The economy unexpectedly contracted in the three months through end-March, defying expectations of a 0.6% quarterly growth.
• Asia hours will see the release of China's new home prices as well as Australian consumer inflation expectations & labour force survey. Key data releases later in the day include U.S. weekly jobless claims & housing starts.
• Central bank activity stays in high gear on Thursday, with the BoE & SNB due to announce their rate decisions. A fair number of ECB members are set to speak, while the BoJ begins its two-day monetary policy meeting.