ForexLive Asia-Pacific FX news wrap: China repo rates and RRR cuts

• US inflation (PCE) data due Friday – here are the critical ranges to watch
• BOJ hiking (slowly), RBA cutting (slowly), Fed, BoC, RBNZ all cutting
• Federal Reserve Board Governor Michelle Bowman is speaking again on Friday
• European Central Bank speakers on Friday include Lane and Cipollone
• China YTD industrial profits +0.5% y/y (prior +3.6%)
• PBOC sets USD/ CNY reference rate for today at 7.0101 (vs. estimate at 7.0093)
• Australian Treasurer Chalmers sees a positive impact from past China stimulus
• PBOC cuts 7 day reverse repo rate to 1.5% (prior 1.7%)
• People’s Bank of China cuts RRR by 50bp
• A tornado warning has been issued for parts of Florida and Georgia until 6 AM EDT
• USD/JPY sitting around its recent high circa 145.05 after the Tokyo inflation data
• Tokyo area September inflation data: Headline 2.2% y/y (expected 2.2%)
• Base case forecast for RBA to cut on November 5 – a close call, very much data dependent
• More from Fed’s Cook: AI could be inflationary in short term, disinflationary in long tern
• US weather – Helene is now an “extremely dangerous category 4 hurricane”
• Deutsche Bank predicts consecutive 25bp rate cuts by ECB starting in December
• New Zealand consumer confidence improved to 95.1 in September (prior 92.2)
• Fed’s Cook says she ‘wholeheartedly’ supported 50bp rate cut
• Goldman Sachs raises GBP forecasts, predicts stronger sterling in 2024
• The Swiss National Bank made its third rate cut, heading towards the end of cutting cycle?
• ICYMI – More China stimulus, this time its likely to have immediate impact
• Should we expect oil to return to $100 per barrel?
• Forexlive Americas FX news wrap: US dollar fades as China trades jump
• ICYMI – Global central banks are unprepared to handle an AI-driven banking crisis
• Another record high for the S&P
• Trade ideas thread – Friday, 27 September, insightful charts, technical analysis, ideas

China
promised rate cuts on Tuesday, and today they were implemented:

• the
  People’s Bank of China cut the reserve requirement ratio (RRR) by
  0.5 percentage points for financial institutions
• the
  7-day reverse repo rate was cut to 1.5%, from 1.7%
• the
  14-day reverse repo rate was cut to 1.65%, from 1.85. Earlier in the
  week this had been cut from 1.95% to 1.85%

Chinese
stocks continued to surge but there was not the same ‘risk on’ response in major FX,
with the USD higher against AUD, EUR, GBP, NZD and CAD (and CHF …
I’ll come back to JPY in a bit).

Apart
from the PBoC cuts we had data from China’s National Bureau of
Statistics (NBS) showing industrial profits plunged by 17.8% in
August from a year ago. This was shrugged off, China stimulus is the
driver for now.

Earlier
in the session were inflation data from Japan, Tokyo area CPI.
Headline and core rates were steady at or above the BoJ target rate
of 2%, but the ‘core-core’ (excluding food and energy) was steady
well below it (at 1.6%). During September the Japanese government
reintroduced subsidies for electricity and gas, helping to restrain
prices.

USD/JPY
rose after the CPI data to a three-week high above 145.55, briefly.
Its subsequently traded back towards 145.00 to be still a touch
higher on the session.

Still
to come today, at 8.30 am US Eastern time, are PCE (inflation) data.
This could have an impact on the 25 vs 50 debate about what the
Federal Open Market Committee (FOMC) will do next.

USD/JPY

This article was written by Eamonn Sheridan at www.forexlive.com.