Headlines:
- USD/JPY up 2% to 131.00 as yen capitulates further
- USD/JPY hits 130.00 for the first time in 20 years
- BOJ plays a dangerous game, yen lock and loaded for the next leg lower
- BOJ's Kuroda: Desirable for currency to move stably reflecting economic fundamentals
- BOJ's Kuroda reaffirms bond market operations is to ensure cap on 10-year yields target
- BOJ's Kuroda: Consecutive bond buying operations is to avoid speculative market moves
- The dollar is on a rampage
- No red line being drawn yet on the yuan's plunge
- Saxony April CPI +7.2% vs +7.0% y/y prior
- Spain April preliminary CPI +8.4% vs +9.0% y/y expected
- OPEC+ said to be likely to stick with existing deal at next week's meeting
Markets:
- USD leads, JPY lags on the day
- European equities higher; S&P 500 futures up 1.5%
- US 10-year yields up 0.4 bps to 2.822%
- Gold up 0.2% to $1,889.60
- WTI down 0.5% to $101.52
- Bitcoin up 1.4% to $39,682
It's all about the dollar again today with the yen's capitulation also part of the picture, as the BOJ opts to maintain its yield curve control policy. That sent USD/JPY skyrocketing to its highest in two decades, with the pair rising above 130.00 to briefly clip 131.00 and is holding just below that now.
The greenback's strength was evident in the handover from Asia to Europe, helped by a continued depreciation in the Chinese yuan. Again, I feel this is something that many aren't talking about but it is worth noting as it is feeding to further dollar gains this week.
In that lieu, I'd argue the plunge in the yuan is also partly weighing on the aussie and kiwi - which are both struggling heavily today despite better equities sentiment.
AUD/USD is down 0.5% to 0.7080 levels, as sellers eye a potential move towards 0.7000 again while NZD/USD is down 1.1% to 0.6470 levels, which is the weakest since July 2020.
Meanwhile, EUR/USD is being pressured below 1.0500 as it trades to fresh five-year lows while GBP/USD is down another 110 pips to 1.2438 as the pound continues its freefall against the dollar.
The bond market is taking a bit of a breather while equities are seeing a solid bounce to try and salvage some pride after what has been a torrid month of trading so far for stocks. European indices are holding gains well above 1% while US futures are also pointing to a solid open, helped by Meta's earnings beat yesterday.
