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USD/JPY Cracks to New High Despite Verbal Intervention

  • NZD is the poorest performing currency in G10, falling against all others (including the JPY) after the RBNZ policy decision overnight. While the bank hiked rates by 50bps against a consensus expectation of a 25bps rise, the decision was perceived as dovish as the bank opted to bring forward the beginning of the tightening cycle, but critically stop short of raising market expectations of a higher terminal rate. The bank's minutes noted that members increased the OCR by more "now, rather than later". NZD weakness followed, putting AUD/NZD at the best levels since mid-2020.
  • JPY is another underperformer, tipping USD/JPY to new cycle highs and the best levels seen since 2002. The rate cleared the highs seen earlier in the week, touching 126.32 in the process. The move coincided with a speech from BoJ's Kuroda, who doubled down on the BoJ's intent to "persistently" pursue easing. Markets volatility prompted a number of comments from government ministers - most notably economy minister Yamagiwa, who noted that FX stability is "important", adding that sharp FX moves are "undesirable". The comments had little impact on the pair.
  • Focus turns to US PPI data due following the CPI release yesterday, as well as the Bank of Canada rate decision. The Bank are seen raising rates by 50bps to 1.00%. Earnings season unofficially kicks off, with BlackRock and JPMorgan due today.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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