Europe Summary and Highlights 18 Sep
USD/JPY extends bounce on yen sell the fact out of non-hawkish BoJ hike
Lack of overt signalling and mixed comments fail to validate mkt pricing, seeing supply step back
Pair runs for next resistance at 158~
Europe
Very much all about the BoJ in Asia and the European morning. As had seemed the risk, it proved a ‘sell the fact’ for the yen out of the expected hike that lacked enough explicit hawkishness to validate and give confidence in the market’s more hawkish pricing trajectory. The 7-2 vote, with 2 dissents for no change and no votes for more, also went with the grain.
USD/JPY lifted to 157+ out of the decision and statement, eased back on some of the initial press conference comments regarding inflation risks and remaining accommodation, before then extending further on the lack of urgency and follow through signalling. Ueda in particular noted a desire to see if CPI stabilised at 2% into the fiscal year end and also to see spring wage round. The 'non-hawkish-hike' encouraged supply to step back, and the move has extended towards the next resistance level up at 158.
Largely consolidation elsewhere. Oil still easing off its week’s high, -$1 or so today, S&P and Nasdaq slightly in the plus. US10s steady at around 4.95%, sitting off the figure test.