ForexLive European FX news wrap: Japan wage increase highest in 33 years but yen falls

Headlines:

• Japanese yen struggles despite nod for BOJ policy shift
• Japan’s largest trade union: Preliminary data shows average wage hike of 5.28% this year
• BOJ reportedly making final preparations to exit negative rates next week
• Bitcoin stumbles further, now down 6% on the day
• ECB’s Rehn: We have started discussing rate cuts
• France February final CPI +3.0% vs +2.9% y/y prelim
• Italy February final CPI +0.8% vs +0.8% y/y prelim
• China February M2 money supply +8.7% vs +8.8% y/y expected
• PBOC said to have no intention of actively draining cash from the banking system

Markets:

• CHF leads, NZD lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields down 2.5 bps to 4.273%
• Gold up 0.2% to $2,166.74
• WTI crude down 0.6% to $80.31
• Bitcoin down 4.8% to $67,301

There wasn’t too much movement on the session but the most notable one was yen bulls being dealt a setback once again.

The disappointment from the BOJ last year is a scarring reminder that pricing in an imminent policy shift too soon for the Japanese central bank hasn’t always worked out. And so, even after a more positive development on the spring wage negotiations and a report that the BOJ is making final adjustments to end negative rates next week, the yen fell after a minor bump higher.

USD/JPY fell to a low of 148.03 on the headlines but quickly recovered that to 148.30, before extending its advance to 148.80.

As for the dollar, it is keeping steadier after the jump in Treasury yields yesterday. And even with the slight retreat in yields today, it isn’t factoring in too much for now. The aussie and kiwi are among the laggards as the Chinese yuan weakened further, following a move by the PBOC to drain liquidity via its medium-term loan operation for the first time in 16 months.

Besides that, equities are keeping cautiously optimistic after yesterday’s drop. European indices are consolidating at record highs while US futures are also pointing to light gains ahead of the Wall Street open.

And we also saw Bitcoin stumble further after selling pressures in late US trading yesterday. The cryptocurrency now looks to solidify a drop below $70,000 with the low earlier briefly hitting just under $66,000. It is now down nearly 5% to $67,301.

This article was written by Justin Low at www.forexlive.com.