The better tone of the EUR and stock indices this morning is allowing the JPY to soften. As a consequence, USD/JPY is pushing below the weekly cloud cap at 94.30 which could be a technical signal for material JPY weakness. As expected the BOJ policy meeting overnight did bring upward revisions to growth and inflation. However, these were tempered by the BoJ's indication that it will help lenders provide credit and by its forecast that deflation will only end in 2011. The BoJ's policy meeting coincided with weaker than expected labour market and industrial production data. The unemployment rate rose to 5% in Mar, the industrial production climbed at +0.3% m/m in March. Cable has pushed higher this morning largely on the back of the softer USD vs the EUR. Exit polls following last night's televised debate between the leaders of the three main political parties suggested that Cameron was the winner. Insofar as this may increase the possibility that the May 6 election may yet produce a majority government it is slightly encouraging for the pound. That said, once again the party leaders last night failed to give any details as to where most of the spending cuts needs to tackle the GBP 163 bln budget deficit will fall. The pound's fate in the coming 6 months broadly lies with the commitment shown by the new government towards tackling the budget deficit. Despite its early push higher this morning cable has failed to push to USD1.5400.
The AUD felt a pre-policy meeting boost this morning in the form of better than expected private sector credit data (+2.1% y/y). The mkt is forecasting a 25 bps rise in the RBA's cash rate on May 4.
The breakdown of the US Q1 GDP data this afternoon will be particularly key in determining how self-sustaining growth in the US economy is becoming. US Chicago PMI, Michigan confidence and Canadian Feb GDP are also due. Jane Foley Research Director FOREX.com email@example.com +44 207 398 5024