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USDJPY Prints Above 135.00, GBP Whipsaws Post UK CPI Data

  • Two-way price action for the US Dollar on Wednesday leaves the USD index moderately higher on the week as US 2-year yields extended their upward shift to around 15bps since Friday’s close.
  • USD/JPY underwent a sharp bout of volatility as Bloomberg cited sources in reporting that the Bank of Japan are said to be wary over any tweak of yield curve control in April, with the smoother curve said to suggest no need for a policy move at this juncture. The piece adds that the bank is said to be mulling if a guidance change can wait or not.
  • Volumes surged across futures markets, with spot USDJPY very briefly spiking to a fresh high of 135.13 before fading back below the 135 handle. Notably, EURJPY (+0.32%) looks set to extend its two-week rally to around 3.2%.
  • GBP also saw some sharp two-way price action after initially rising on an above-expected March inflation release. While headline inflation slowed from the February print, Y/Y CPI remaining in double digits and core CPI holding above forecast poses further problems for the Bank of England, prompting a number of sell-side analysts to add 25bps to their MPC hike cycle.
  • GBP/USD's post-data rally put the pair at 1.2472 before running out of momentum and falling victim to a mid-session correction higher for the greenback. However, the pair has settled in positive territory ahead of the APAC crossover with sights remaining on the bull trigger at 1.2546.
  • The Canadian dollar is among the weakest G10 performers today, declining 0.45%. The Public Service Alliance of Canada has seen around 150,000 government workers striking in a dispute over wage increases, providing a marginal tailwind for USDCAD.
  • New Zealand CPI headlines the APAC docket on Thursday with potential comments from RBA Governor Lowe, due to hold a media briefing about Review of the RBA.

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