The March US CPI report came in higher than expected, rocking markets during US hours. Reverberation continued here during Asia today. USD/JPY had climbed above 153.00 in late US trade and it was sitting just below the big figure as Japan became active. We had verbal intervention aimed at supporting the yen from Japan's Vice Finance Minister for International Affairs Kanda, from Japan's Finance Minister Suzuki, and from chief cabinet secretary Hayashi. USD/JPY has dribbled a little lower, to around 152.80. The statements we had from these officials were not overly aggressive and didn’t hint at any imminent actual yen-buying intervention. The next step should be a raising of the aggressiveness of commentary, followed by ‘rate checks’ and then actual intervention.

Also of note today in response to market moves was the reference rate setting for USD/CNY from the People’s Bank of China. The PBOC set the USD/CNY central rate a whopping 1654 pips stronger (for CNY) than the Reuters estimate. This is the biggest discrepancy ever, with records back to 2018. The People’s Bank of China is set on not letting the yuan devalue. I posted (in the bullets above) my “Refresher on the bind the PBoC is in on the weak yuan - don't want to trigger a crash”.

Also from China today we had very soft inflation data. Consumer prices barely increased from a year earlier and the PPI showed that industrial prices continued to slump. There is still ongoing deflationary pressures in China’s economy.

Major FX rates are little net changed on the session here. Traders are now awaiting the European Central Bank meeting, where no change is the wide expectation.

Regional equities followed Wall Street's lead lower.

Oil prices remained bouyed by fears of Iran retaliation.

usdyen wrap chart 11 April 2024 2