Stronger than expected GDP data from Japan lifted Nikkei and sends the yen lower broadly. Q1 GDP rose 0.6% qoq versus expectation of 0.4% qoq, and compared to prior quarter's 0.4% qoq. The annualized growth rate was 2.4% versus consensus of 1.5%. GDP deflator rose 3.4% yoy versus expectation of 3.6% but was much higher than prior 2.4% yoy. While the headline numbers were solid, some economists noted that the details weren't as promising. It's noted that private inventories contributed an outsized 0.5% to GDP. And stripping that out, the economy barely grew. There are speculations that BoJ would still need to ease monetary policy further to hit the 2% inflation target by mid-2016. At the time of writing, Nikkei is trading up 0.7%. USD/JPY stays firm after yesterday's surge and the technically development suggests a test on recent high at 122.01.
BoE minutes and FOMC minutes are the two major focuses today. The BoE minutes will likely show unanimous vote in the may meeting to keep main refinancing rate at 0.5% and the asset purchase target at GBP 375b. The information in the quarterly inflation report, which showed downward revision in 2016 inflation, should be given to policy makers when they met. And attention would be on their view on the dip in inflation. But it's likely that they'll keep viewing such dip in inflation as temporary as contributed by falling energy prices.
The FOMC minutes will probably show that policymakers stayed confidence in reaching the 2% inflation target in medium term. There are talks that Fed's communications, including the FOMC minutes, would remain vague regarding the timing of the first rate hike. While June hike is basically ruled out, there are doubts on whether Fed would hike in September and that's subject to the performance of the economy in Q2. And the attention would be on how confident are policymakers regarding to the chance of a rebound in Q2.
Elsewhere, Australia Westpac consumer confidence rose 6.4% in May. Germany will release PPI while Swiss will release ZEW expectations in European session. Canada will release wholesales sales.