USD/JPY approached, but didn’t get to, 156.00 during Tokyo morning trade but saw a rapid drop. The fall was catalysed by JGB developments and by comments from Japan’s LDP’s Kato, described as a "ruling party heavyweight". He is a former chief cabinet secretary and is seen by some analysts as a candidate to become future prime minister. His remarks can be found in the post linked above, but in short while he said Japan is not there yet, it is seeing conditions fall in place for the central bank to normalise monetary policy, including a return to positive rates. Almost simultaneously news hit the Bank of Japan had trimmed its purchases of 5-10 year Japanese Government Bonds (JGBs) at today’s operation compared to the previous operation. The purchases still fell within expected bounds, which cushioned the impact somewhat. More on the JGBs in the Kato post linked above.

USD/JPY dropped under 155.60 briefly before bouncing quickly back to around 155.90 and as I update has subsided to circa 155.75.

From Australia today we had news drop that the government is going to assume annual headline inflation is expected to ease to 3.5% by June and 2.75% by December 2024. This compares with the latest RBA forecast showing inflation to remain at 3.8% cent until December before falling to 3.2% in June 2025 and 2.8% in December 2025.

AUD/USD traded lower.

Also from Australia today were some encouraging numbers for the Reserve Bank of Australia from the National Australia Bank Business Survey for April. This showed, amongst more, that employment growth is slowing, forward orders for work are down, and pricing pressure is generally easing back to lower rates.

Note also in the points above we had data from China published over the weekend, CPI inching higher while credit growth fell.

usdyen wrap chart 13 May 2024 2