USD/JPY near 4-month high with BOJ on hold

BOJ keeps rates, asset purchases unchanged

The Bank of Japan kept its benchmark rate unchanged at -0.1% and the JGB yield target at zero percent, as expected. It also left asset purchases at annual pace unchanged at 80 trillion yen, J-REIT purchases at 90 billion yen and ETF purchases at 6 trillion yen. In the outlook report, the Bank trimmed its FY2019/20 growth outlook to 0.8% from 0.9% and for 2020/21 to 0.9% from 1.0%. It set an initial 2021/22 GDP growth target at 1.2%.

USD/JPY dipped below the 112.0 handle to 111.84 after the announcement and is now at 111.99.

USD/JPY Hourly Chart

Source: OANDA fxTrade

Aftermath of Australia’s weak CPI print

A day after Australia’s Q1 CPI came in below expectations, market talk focus has been to adjust predictions of the next RBA move. The probability of a cut at the May meeting has risen to more than 50%, according to market pricing and a number of research notes from banks including Citigroup and Royal Bank of Canada have brought forward predictions from August to May.

AUD/USD fell to 0.7004 yesterday, the lowest since March 8, and had seen a mild bounce to 0.7023 this morning. Australia and New Zealand markets are closed today for ANZAC Day.

AUD/USD daily Chart

Soiurce: OANDA fxTrade

Durable goods scheduled

It’s a relatively light data calendar today, especially in Europe, where the highlight will likely be Sweden’s Riksbank rate meeting. The Bank is still forecast to keep its benchmark interest rate unchanged at -0.25%.

The US calendar features US durable goods orders for March, which are seen rebounding strongly to +0.8% from -1.6% in February. It’s a notoriously volatile data series and the six month average is -0.5%. A speech from ECB’s De Guindos rounds off the session.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

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