The early Asian Pacific session has seen the AUD emerge as the strongest of the major currencies while the JPY is the weakest.
Fundamentally, the Australia CPI did come out a little higher than expectations at 3.5% vs 3.4%, but the good news is it seems to be moving lower after peaking at 4.0% in May.. The low for the post-spike high cycle did reach 3.4% from December to February,.
The AUDUSD is up 0.13% which is not a heck of a lot, but is up 0.39% vs the JPY. The JPY got it’s catalyst from some wishy-washy comments from BOJ Himino.
Himino highlighted the ongoing instability in financial and capital markets, emphasizing the Bank of Japan’s need to monitor these developments with utmost vigilance. He mentioned that the BOJ will carefully assess how these market changes, both domestic and international, impact economic activity, prices, and the associated risks, as well as the level of confidence in their economic outlook.
He further commented The BOJ is prepared to adjust its monetary policy if it gains confidence that its outlook for economic activity and prices will be realized (a hike reference), but stressed the importance of conducting monetary policy appropriately to achieve the 2% inflation target in a sustainable and stable manner, while maintaining close communication with market participants and other stakeholders.
He noted the need to monitor recent market volatilities, such as weaker stocks and a stronger yen, and acknowledged the importance of refining the BOJ’s approach to estimating the neutral interest rate as a useful reference. However, he cautioned that estimating the neutral rate does not automatically indicate the correct policy path.
Looking ahead to fiscal years 2025 and 2026, Himino expects a balanced state where the inflation rate aligns with the price stability target and economic growth slightly exceeds the cruising speed. Finally, he also recognized that the recent appreciation of the yen may ease import costs and profit pressures on small and medium-sized firms, but it could also reduce yen-denominated profits for export industries and Japanese multinationals.
The market interpreted the wishy-washy comments to be more dovish, pushing the USDJPY and other crosses to the upside (lower JPY).
For the USDJPY, the 50% of the move up from the 2023 low comes in at 144.58. A move above that would have traders looking back toward the 100 hour MA at 144.899 (and moving lower). Recall from yesterday, that MA stalled the rally.
For the EURUSD today, the price has reversed some of the gains from yesterday and looks toward the rising 100-hour MA at 1.11549. Like the USDJPY, yesterday, the price stalled at the 100 hour MA and reversed higher.
The Japan’s Nikkei 225 is trading down -0.22%.
Spot gold is trading down -$10.64 or -0.43% at $2514 after closing at a new record high yesterday
Bitcoin is back below $60,000 after failing above the 100/200 day MA near $63,550 last week and Monday. On Tuesday, the price ran lower bottoming at $58.900 before bouncing modest.
