Heading into today’s European trading session, the risk tone is leaning risk-on. Asia-Pacific indices are positive across the board, measures of volatility are subdued, and safe-havens trade mixed.
Leading Asia-Pacific indices to the upside is the Topix at +2.09%, followed by the Nikkei 225 at +1.75%, the ASX 200 at +1.32% and the Hang Seng and CSI 300 at +0.58% and +0.18%, respectively.
In the FX complex, it’s JPY leading to the downside as the BoJ doubled down on its dovish bias, stating it would buy unlimited amounts of bonds as needed, setting it apart from most other major central banks. Consequently, USDJPY has hit fresh 20-year highs, while GBPJPY reclaimed the 162.00 and 163.00 handles.
In contrast to JPY and leading to the upside is USD, with the reserve currency supported by ongoing and rising FOMC rate hike bets. Indeed, alongside fresh highs in USDJPY, EURUSD briefly slipped below the 1.05 handle and AUDUSD below the 0.71 handle.
Looking ahead, expect USD to remain in focus today with the latest US GDP data scheduled for release in the US trading session. Until then, expect the market’s focus to remain fixed on ongoing themes such as the global economic outlook and policy divergence between the major central banks.
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