Yen Strength Holds as Focus Turns to RBA Rate Cut
| Action Insight Mid-Day Report 2-17-25 |
Yen Strength Holds as Focus Turns to RBA Rate Cut |
Yen remains the standout performer, even though momentum had moderated slightly. Discussions surrounding BoJ’s next move continue to dominate, particularly in a low-activity session with both US and Canadian markets closed for holidays. After stronger than expected Japanese Q4 GDP report, market expectations for a July rate hike to 0.75% have strengthened to around 80%. However, the timeline could shift sooner if results from the upcoming Shunto wage negotiations indicate stronger-than-expected wage growth. Looking further ahead, some analysts see BoJ’s policy rate reaching 1% by year-end, which would mark the lower bound of its own estimated neutral rate range of 1-2.5%. This shift in policy expectations has kept Yen well-supported against its peers for now. In the upcoming Asian session, focus is turning toward RBA, which is widely anticipated to begin its easing cycle with a 25bps rate cut to 4.10%. A Reuters poll of economists showed that 31 out of 41 analysts expect another quarter-point cut in Q2, bringing rates down to 3.85%. Among major Australian banks, ANZ, CBA, NAB, and Westpac all foresee a 25bps cut tomorrow, but their forecasts for cumulative cuts in 2025 vary between 50 and 100 basis points. Market participants will closely watch the RBA’s guidance and updated economic forecasts for further clues on the policy path ahead.... |
USD/JPY Mid-Day Outlook Daily Pivots: (S1) 151.83; (P) 152.49; (R1) 152.96; More... Intraday bias in USD/JPY remains neutral with focus on 38.2% retracement of 139.57 to 158.86 at 151.4. Strong rebound from there will maintain near term bullishness. On the upside, break of 154.79 will revive the case that correction from 158.86 has completed at 150.29. Further rise should be seen to retest 158.86 high. However, break of 150.92 and sustained trading below 151.49 will raise the chance of trend reversal, and target 148.64 support instead. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 21:30 | NZD | Business NZ PSI Jan | 50.4 | 47.9 | 48.1 | | 23:50 | JPY | GDP Q/Q Q4 P | 0.70% | 0.30% | 0.30% | 0.40% | | 23:50 | JPY | GDP Deflator Y/Y Q4 P | 2.80% | 2.80% | 2.40% | | 04:30 | JPY | Tertiary Industry Index M/M Dec | 0.10% | 0.20% | -0.30% | | 04:30 | JPY | Industrial Production M/M Dec | -0.20% | 0.30% | 0.30% | | 10:00 | EUR | Eurozone Trade Balance (EUR) Dec | 14.6B | 15.0B | 12.9B | 13.3B | | 13:15 | CAD | Housing Starts Jan | 250K | 231K |
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