Risk on market sentiment remained in place during the Asian session after a Russian warplane struck a US surveillance drone over the Black Sea on Tuesday.
Markets remain on the back foot as this was the first known physical contact between the Russian and American militaries since the war in Ukraine started last February.
The USDJPY pair moved higher this morning after the BOJ Governor Kuroda said it must maintain current monetary easing, but there will also likely be scoped to consider steps to address side-effects of easy policy.
Outgoing Governor Kuroda also said that “by maintaining current easy policy, it’s possible to sustainably, stably achieve our price target, accompanied by wage growth, while looking after side-effects of our policy.”
Earlier today we had the release of the Bank of Japan Meeting Minutes and Members agreed Japan’s economy expected to recover. The minutes also touched upon inflation.
The meeting noted that “Members agreed Japan’s inflations likely to slow toward latter half of next fiscal year.” Also One member said there is good chance inflation will remain fairly elevated.
The minutes also said that BoJ Members shared view underlying rise in inflation likely to lead to sustained price rise backed by wage hikes and “Members agreed boost to consumption from pent-up demand may turn out to be weaker than expected depending on covid developments.”
Earlier today the People’s Bank of China announced a one-year injection of funds via its regular Medium-term Lending Facility (MLF) operation.
The rate was unchanged from the February MLF injection and is a heads up to an expected unchanged rate on one- and five-year Loan Prime Rates that’ll be set on March 20.
Also, China’s industrial production advanced 2.4% yoy in January-February 2023 combined, faster than a 1.3% gain in December 2022 but less than market forecasts of 2.6%.
Manufacturing output quickened following the lifting of the zero-COVID policy, while activity slowed at both mining and utilities. Among sectors, output of manufacturing accelerated, while both mining and utilities eased.