Daily Digest Market Movers: AUD/JPY gains ground after weaker Tokyo’s CPI data
- Tokyo Consumer Price Index rose 1.8% YoY in April, well below the previous print of 2.6%. Markets were broadly expecting Tokyo inflation to hold steady over the period. The Core CPI fell sharply to 1.6% year-on-year, marking its lowest level since March 2022 and falling well below forecasts of 2.2%.
- SocGen's assessment of the potential for USD/JPY to test the Japanese Ministry of Finance's intervention limits due to persistent US rate expectations and recent market dynamics suggests a significant focus on the interplay between US economic data and currency movements.
- On Friday, a report from Reuters said that the Bank of Japan (BOJ) is expected to project that inflation will remain close to its 2% target in the coming years and signal its preparedness to raise interest rates from their near-zero levels. This stance by the BOJ is aimed at preventing yen depreciation and discouraging market participants from pushing the currency to fresh 34-year lows.
- Jiji news agency reported on Thursday that the Bank of Japan (BOJ) might reduce its bond purchases appears to be exerting a more significant influence on the market sentiment compared to the lower-than-expected Tokyo Consumer Price Index (CPI) data released today.
- According to Luci Ellis, Westpac's chief economist and former Assistant Governor (Economic) at the Reserve Bank of Australia, inflation slightly surpassed expectations in the March quarter. They anticipate the Board will maintain interest rates in May and have revised the projected date for the initial rate reduction from September to November this year.
- According to analysts at Barrenjoey Capital Partners, a leading Australian investment banking firm, advised to utilize the trimmed mean to rank Australia's inflation. Australia's six-month annualized rate of trimmed mean inflation, standing at 3.6%, is notably the highest worldwide, surpassing even the United States' 3.2% six-month annualized rate of trimmed mean inflation.
- Australia’s Consumer Price Index (CPI) rose by 1.0% QoQ in the first quarter of 2024, against the expected 0.8% and 0.6% prior. CPI (YoY) increased by 3.6% compared to the forecast of 3.4% for Q1 and 4.1% prior. Australia’s Monthly Consumer Price Index (YoY) rose by 3.5% in March, against the market expectations and the previous reading of 3.4%.
- According to the Japan Times, the proportion of Japanese companies intending to increase their pay scales reached 70.7%, marking a rise of 6.3 percentage points from the previous year. Additionally, the number of companies planning to implement pay-scale hikes and regular pay increases totaling 5% or more amounted to 36.5%, nearly doubling from the previous year. This could provide support for the Yen.
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