ForexLive Asia-Pacific FX news wrap: Tokyo inflation under 2% for the first time in 5 mths

• Many Chinese banks have cut mortgage rates today (cuts were announced earlier this month)
• Federal Reserve Bank of Boston President Susan Collins speaking on Friday
• US Vice President Kamala Harris will not appear on Joe Rogan’s program
• Bank of Canada Governor Tiff Macklem speaks on Friday – Q&A
• Japan’s economy minister says the weak yen has various impacts on the economy
• PBOC conducts a 1 year MLF for 700bn yuan, rate unchanged at 2%
• PBOC sets USD/ CNY reference rate for today at 7.1090 (vs. estimate at 7.1087)
• WSJ: Elon Musk has secretly been in regular contact with Russia’s Putin since late 2022
• Post US election relief rally for stocks is coming (Citi)
• Wall Street Journal poll puts Trump ahead of Harris, 47 to 45
• Japanese Inflation Data Impact on USD/JPY; BoJ Meeting Outlook
• Japan September PPI Services (Corporate Services Price Index) 2.6% y/y (expected 2.7%)
• Tokyo area October inflation data: Headline 1.8% y/y (prior 2.2%)
• Japan election this weekend, LDP might lose out, need support from other parties to govern
• UK October consumer confidence -21.0 (expected -21.0)
• Yen intervention official Mimura says fin min Kato met with US TreasSec Yellen on Thursday
• Weekend speech coming up from Bank of England Governor Bailey – Saturday US time
• RBC analysts anticipate another 50bp rate cut in December from the Bank of Canada
• Bank of Canada is out of touch, “didn’t grasp the challenges facing the Canadian economy”
• 4 reasons US equites are nervous
• UK PM Starmer: Brits who get income from shares, property don’t count as ‘working people’
• New Zealand October consumer confidence -4.1% m/m to 91.2 (prior 95.1)
• Potential impact of Japan and US Elections on BoJ intervention, and monetary policy stance
• Forexlive Americas FX news wrap: Initial jobless claims surprise to the downside
• Japan election weekend – if the yen weakens after, the BOJ could step in with intervention
• US stock indices close next for the fourth consecutive day
• The EURUSD buyers are taking back some control from the sellers.
• Trade ideas thread – Friday, 25 October, insightful charts, technical analysis, ideas

Late
in the US afternoon (really late) Japan’s Finance Ministry’s Vice
Finance Minister for International Affairs Atsushi Mimura crossed the
newswires indicating that finance minister Kato met US Treasury
Secretary Yellen on Thursday. FX was one topic of discussion. I noted
at the time that earlier this year, when USD/JPY was surging up
towards 160 Yellen met with the prior set of officials from the
Ministry of Finance. Yellen was very cold on the idea of any US
participation to support the yen.

Mimiura added some ‘hot button’
intervention remarks (see bullet above), in brief:

• have
  recently seen one-sided, sharp fx moves
• vigilant
  to FX moves including those driven by speculation

USD/JPY
barely moved on all this.

Tokyo
area inflation data was published a little later, with all three main
measures coming in under the Bank of Japan 2% target:

• Headline
  1.8% (down from 2.2% in September), under
  2% for the first time in 5 months.
• Core
  (i.e. excluding food) 1.8% (from 2.0% in September)
• Core-core
  (i.e. excluding food and energy, this is closest to the US ‘core’
  inflation definition) 1.8% (from 1.6% in September)

A
little later we had ‘services PPI’ for September, in at 2.6%
(from 2.7% in the prior month).

I’m
not convinced that lower CPI will stop the Bank of Japan from hiking
rates, they seem to be intent on doing so. The Bank meet next week
(30th
and 31st)
but are expected to remain on hold with a rate hike viewed as more
likely at the December or January meeting. Having said this, the yen
was sold a little on the data. USD/JPY popped to around 152.10 before
slipping back down to lows back under 151.80. Its around 151.85 or so
as I write.

We
had mild verbal intervention remarks from Japan’s economy minister.

From
China today was a Medium-term Lending Facility (MLF) injection that
did not fully offset the maturing amount. The rate on the new funds
made available was unchanged at 2%. China’s
mortgage rate cuts also came into effect today. More in the points
above.

Over
this coming weekend Japan goes to the polls for its general election.
The ruling LDP is expected to lose seats, but still be able to form
coalition government. Again, more in the points above.

Major
FX traded very small ranges, as did oil. Gold lost a little ground

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