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Market Recap

The Bank of Japan BoJ meeting went quite as expected. Policy remains on hold, as its likely to be for the remainder of the Anthropocene Epoch. They upgraded their view of the growth outlook, as nearly every other central bank has done albeit just slightly. Uniquely though they cut their forecast for inflation this FY to 0.1 from 0.5 as expected, due to lower mobile phone costs. Oh dear. Every other country is facing rising inflation due to base effects and higher oil prices, but not Japan!

Here are the Bloomberg consensus forecasts for annual inflation rates this year vs last year. Japan is forecast to have the smallest increase tied with New Zealand. Its also forecast to have the lowest inflation in G10 for 2021.

So much for money printing will cause hyperinflation. Japan has been engaging in aggressive quantitative easing for 20 years now since March 2001 and this is the result!

Later ,BoJ Gov. Kuroda commented that the 2 inflation target will be achieved in 2024 or later, i.e. after he leaves office in April 2023 if at all. Gov. Kuroda is certainly the Chiang KaiShek of central bankers, perennially pledging to retake the mainland while having no realistic hope of doing so.

The BoJ meeting was not the immediate cause of the yens weakness today however. If anything, the currency strengthened slightly afterward, presumably on a sell the rumor, buy the fact response. Rather, JPY seems to have…