BOJ Rate Hike Expected to Boost Yen, Impact USD/JPY and Nikkei 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
RBA Expected to Hold Interest Rates at 4.35% as Markets Watch AUD/USD and ASX 200 
Japan Signals Preference for Low Interest Rates as BOJ Policy Debate Intensifies 
Fed Chair Kevin Warsh Signals Policy Overhaul as Hawkish Rate Outlook Rattles Markets 
China Sets 1.25% Overnight Reverse Repo Rate Below Market Expectations 
Global markets turned weaker on Wednesday after a hawkish FOMC statement heightened the chances of a rate hike in June. US dollar rallied against most of the majors, with the dollar index trading above the 95 level. Dollar is likely to continue appreciating with focus on UK retail sales for the day.
The USDCNY fixing rate reached the highest level since early February. This clearly hints that China wants to release the pressure on CNY via managing the fixing rates.
In the meantime, it appears that the central bank also sells USD in both CNY and CNH market to contain the expectation of a large CNY depreciation.
The onshore bond market, however, has been suffering from this strategy as PBoC’s intervention will naturally withdraw CNY liquidity from the inter-bank market.
In the meantime, following USD softness, CNY has weakened somewhat against the basket of currencies. Hence, it is recommended to stay long in 2M USD/CNY forwards.
