ForexLive Asia-Pacific FX news wrap: China mulls $278bn stock rescue package. BOJ on hold.

Those
two headlines above are what drove market movements during the
session.

News
crossed that China is considering a 1 trillion yuan fiscal stimulus
and a similarly sized special bond stimulus to rescue the stock
market. Chinese mainland and Hong Kong stocks jumped higher on the
news, as did the yuan. The news has underpinned China stocks and the
yuan since, despite some retracement.

AUD/USD
also moved higher on this news, topping out around 0.6600. EUR, NZD,
GBP, CHF and CAD all rose against the US dollar also.

The
other item of interest from the timezone was the Bank of Japan
meeting conclusion. The Bank left its negative short-term interest
rate and Yield Curve Control policies unchanged, an ‘as expected’
decision. The Bank also issued the quarterly update to its “Outlook
for Economic Activity and Prices” report. The bank lowered its
forecasts for ‘core’ CPI:

• fiscal
  year 2024 median forecast at +2.4% vs +2.8% in the October Outlook
  Report
• fiscal
  year 2025 median forecast at +1.8% vs +1.7% in October

USD/JPY
initially rose on the releases to just shy of 148.55 but has since
dropped to lows circa 147.90 As I update USD/JPY is back around
148.15 and showing little net change for the session.

Still to come is Bank of Japan Governor Ueda’s press conference, around 0630 GMT (0130 US Eastern time). Now that the January BOJ meeting has passed we’ll be on the hunt for clues for any possible policy change at the next meeting, March 18 and 19.

Offshore yuan update: