USD/JPY Prints Fresh Highs, Downside Limited Despite Further FX Rhetoric

The USD index sits higher, last around 1245. We aren't above 1247, which has marked recent highs, but broader USD trends remain positive. US yields are close to unchanged, while US equity futures are higher, although this hasn't lent support to higher beta FX in the G10 space.

• USD/JPY sits back under 151.70. We got to 151.97 earlier, fresh highs in the pair back to 1990. Earlier comments from BoJ Governor Ueda and board member Tamura didn't show any hawkish push back to the recent BoJ outcome. This weighed on yen at the margins. Comments from FinMin Suzuki in terms of fresh rhetoric around FX weakness, including stating that the authorities were prepared to take bold action, helped curb yen weakness.
• Still, the USD/JPY pull back has been shallow and 1 week risk reversals are not too far off recent highs, suggesting the market is not too concerned around a very sharp USD/JPY pull back.
• Elsewhere, AUD/USD was last near 0.6520/25, up slightly from session lows (0.6511). We weighed earlier by the Feb monthly CPI miss (3.4% y/y, versus 3.5% forecast), although the detail showed firmer services inflation. Another headwind has come from weaker HK/China stocks, due in part to earnings concerns. Iron ore prices are also lower, back sub $103/ton.
• Note as well USD/CNY spot has risen back close to highs from last Friday, near 7.2300. This is another constraint, particularly on the likes of AUD.
• NZD/USD is back to 0.5995, but like AUD is up from earlier lows (0.5988). Today focus has been on the NZ Budget Policy statement. The government plans to push ahead with tax cuts, even as the return to surplus gets pushed out. The NZ Treasury sees scope for RBNZ cuts in H2 this year.
• Later the Fed’s Waller and ECB’s Cipollone and Elderson speak. The March European Commission survey prints.