The US dollar is steady to firmer against most of the major and emerging market currencies. Equity markets are heavier, and oil continues to surrender some of its recent gains. Profit-taking is weighing on eurozone bonds and JGBs while US Treasuries and UK gilts are firmer.  

The main exception to the firmer dollar is the Japanese yen. The Bank of Japan left policy unchanged, as widely anticipated. Its assessment was seen as somewhat less dovish than many expected. While acknowledging that the improvement in exports has paused, and inflation expectations fell recently, updated forecasts will be presented next month. We do not understand Kuroda to rule out further easing next month.

The 10-year breakeven was near 50 bp before the BOJ adopted negative interest rates at the end of January. It slipped below 13 bp on February 18 when it bottomed. It was near 35 bp before this past weekend.  

Perhaps more importantly, though not on most calendars, tomorrow major Japanese employers, especially in the auto and electronics sectors will indicate wage plans for the next fiscal year that starts 1 April. Despite what economists regard as full employment in Japan, wage growth has been poor. In fact, it could be argued that the failure to boost wages lies at the heart of the disappointment over Abenomics. Businesses will likely limit this wage round due to the prospects of lower profits and economic uncertainty.  

When stripped of its rhetoric flourishes, Abenomics appears to have accentuated the disparity in the rather homogenous Japanese society.  Recent polls show waning support for Abe and his cabinet. However, the opposition both within the LDP and in other political parties is fragmented and seemingly devoid of a clear alternative.  

The minutes from the recent meeting of the Reserve Bank of Australia did not shed fresh light on the trajectory of policy. It seemed optimistic that the improved hiring (record quarterly jobs gain) can be sustained but remains concerned about the contagion from a slowing China. The door to another rate cut remains open, but the RBA is not particularly in a hurry. The Australian dollar approached $0.7600 yesterday and recorded a minor reversal pattern. It can slip toward $0.7400 without doing much technical damage though a convincing break of it could warn of a more significant top is in place.