Yen Gains Pared Despite Signs Of Strong Wage Momentum

The USD BBDXY Index sits little changed for the Wednesday session so far, last near 1230.75. Overall ranges have been fairly tight in the FX space, with JPY, AUD and NZD all moderately higher at this stage.

• USD/JPY has again been a focus point, spending the first part of the session drifting lower. We hit session lows of 147.24, not long after headlines crossed that Toyota had agreed to the full union demands around this year's wage negotiations. Similar headlines from other major corporates followed.
• Wages momentum appears to be building, and recall local media reported yesterday that if wage gains are 'significantly' above last year's 3.8% it will prompt a BoJ exit from NIRP. Still, a shift in March from the BoJ is by no means a sell-side consensus viewpoint at this stage.
• Prevailing sentiment indicates a 60-70% probability of a move occurring in Mar/Apr, with 100% priced by June, based off market pricing.
• USD/JPY has firmed this afternoon, back to 147.55/60. Note there is an option expiry for NY cut close to session lows from earlier - Y147.25-35($1.6bln), which may have influence market price action.
• AUD and NZD have drifted higher with NZD outperforming modestly. Secon tier data outcomes didn't impact sentiment for either FX rate. NZD/USD was last near 0.6160, up around 0.20%, while AUD has edged above 0.6610.
• These moves come despite equity sentiment being mixed throughout the region, while iron ore prices are down sharply further. This may have helped curb AUD/NZD gains, with the cross back to 1.0730/35, against earlier highs near 1.0750.
• Looking ahead, we have UK data first up, headlined by monthly GDP, while crude stocks and a 30yr bond sale will be the focus in the US Session.