USD, JPY flows: USD/JPY moves lower after BoJ, USD falls on Trump comments
USD/JPY dropped a figure after the BoJ hiked but the USD was also generally weaker as Trump said he didn't want to raise tariffs on China
The BoJ hiked 25bps as expected but the market has also taken the statement as hawkish, with USD/JPY around half a figure lower since the announcement, having initially fallen a big figure. However, the JPY is not much changed on the crosses as the USD is generally weaker overnight, having lost ground to the risky currencies early in the Asian session on Trump comments saying he would rather not impose tariffs on China following a conversation with Chinse premier Xi. The USD is therefore generally up to 0.5% lower. However, the reaction to the Trump comments may be overdone, as he could easily reverse his position tomorrow. It seems unlikely he will reverse his tariff strategy on the basis of one conversation.
For the rest of the day the market will be alert to further Trump comments on tariffs as well as the PMI data starting at 0815 GMT in Europe. After the BoJ decision we would tend to favour the JPY with scope for a move back to 155, while USD losses elsewhere are less reliable given the potential for Trump to change his tone.