USD/JPY flows: Lifted into period end; EUR/USD 1.14 options

Firm tone to the dollar in Asia, led by USD/JPY, pushing to 40-year highs at 162.40~, with quarter/month end supportive for the pair. That saw the usual response - but no escalation - from the FinMin, reiterating the usual ‘will respond appropriately to moves at any time’ line. MoF may want to see if today's lift is temporary and self policing or whether the break add fresh upside pressure. 

EUR/USD also weighed back from the corrective bounce highs in the 1.1430~ back to below the figure. A big chunk of options at 1.14 today (EUR4.56bn) could prove magnetic.

Ahead of inflation data today, Reuters has ECB sources saying that the recent oil retreat reduces the urgency for a follow up hike although the case for a small hike later on remains firm.

ECB’s Lane also puts a glass half empty spin on things (In terms of the overall inflation impulse, the fact that we do have maybe for a couple of years oil prices above the pre-war level, that essentially is a cost increasing impulse to the economy).

US and Iran meanwhile heading to Doha, albeit with some uncertainty over the status and topic of any meetings. Oil markets remain very calm with prices not far off the lows. Equities also trying to sustain yesterday’s bounce session (S&P +0.1%) after the recent Mag7 led setback.

China PMI inches up and back to positive at 50.3 with new orders at 51.4.

UK Q1 GDP unrevised at 0.6% as expected. EUR/GBP still sitting at the range lows and the main question for the market being whether extreme recent short GBP positioning sees any kind of mini squeeze emerge at some point, which could see the cross pressed lower.