I don’t see tonight’s FOMC minutes tonight weighing much in the balance as concerns have shifted in the direction of incoming data and evidence of rising wage pressures (have a listen to today’s Saxo Market Call podcast, for example, on wages set to rise for Walmart and Home Depot, two very large US retailers). As long as risk sentiment is under pressure here, I would anticipate that potential BoJ tightening/JPY strength might weigh more on crosses like CADJPY, AUDJPY etc., than it will weigh on USDJPY. This is highly awkward for JPY traders as the JPY generally wilts on advancing long US yields, but at the same time we are all anticipating a coming policy shift from the Bank of Japan, with nominee for Governor Kazuo Ueda out testifying before the Lower House on Friday (and the wily Kuroda possible set to make a legacy-defining splash at his final meeting on March 10, all while hedging activity for the coming year is active into the end of the financial year in Japan at the end of March. Some very slight yield steepening going on as well, with the 10 year Treasury benchmark yield pulling within a few basis points of the 4.00% level.

Risk sentiment finally went on tilt yesterday as US treasury yields lifted all along the curve to new cycle highs, with the Fed terminal rate now almost fully pricing three more 25 basis point rate hikes, which would take the Fed funds rate to 5.25-5.50% somewhere in the summer time frame.

Today's Market Quick Take from the Saxo Strategy TeamįX Trading focus: USD firm, JPY chasing its tail despite higher yields as weak risk sentiment, Ueda hearings weigh.

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