- Japan finance minister Suzuki says no comment on FX levels or moves
- BOJ meeting today will pave the way for a move in October and more in early 2024
- PBOC sets USD/ CNY reference rate for today at 7.1729 (vs. estimate at 7.3009)
- Japan September preliminary Manufacturing PMI 48.6 (prior 49.6)
- PBOC is expected to set the USD/CNY reference rate at 7.3009 – Reuters modelled estimate
- More on Japan PM Kishida's moves to spur competition in asset management industry
- ECB's Lane: Inflation over 2% is costly for the economy
- Japan August Inflation: CPI excluding fresh food & energy +4.3% y/y (prior +4.3%)
- LNG strikes - Australian media report that Unions have agreed to end dispute with Chevron
- Australian preliminary PMIs for September: Manufacturing 48.2 & Services 50.5
- ECB's Lane says transmission of monetary policy to the real economy is firmly taking hold
- New Zealand August exports NZD 4.99bn (prior $5.45bn) & Imports NZD 7.28bn (prior $6.65bn)
- There's a Saudi put in the energy markets, oil heading to $100 / barrel
- ICYMI - Russia is banning exports of gasoline and diesel
- NZD traders heads up - New Zealand moves onto daylight saving this weekend
- Bank of Japan statement due today - previews - Ueda under pressure on weak yen
- ICYMI - Goldman Sachs pushes back expectation of first Fed rate cut to Q4 2024 (from Q2)
- Forexlive Americas FX news wrap 21 Sep: Stocks hit the skids as US yields surge
- New Zealand data - Westpac Consumer Confidence for Q3 2023: 80.2 (vs. prior 83.1)
- JP Morgan expect Bank of England rate cycle over, but point out 2 risks to this view
- US stocks close at lows of the day for the 2nd consecutive day
- Trade ideas thread - Friday, 22 September 2023
Ahead of the much-awaited BoJ statement today we had inflation data from Japan for August. Once again the levels of underlying inflation are at high levels (for Japan):
- the ‘core’ rate, that excluding fresh food, came in at 3.1% vs. the 3.0% expected and above the Bank of Japan target of 2% for the 17th month in a row. The Bank of Japan keep telling us that such high levels are transitory. I’m not a Japanese household facing rising living costs but if I were I’d be considering heading down to BOJ HQ with a few mates and pitchforks. 17 months is not transitory.
- You think that's high, the ‘core-core’ level, which strips away the effect of both volatile fresh food and fuel prices and is the closest to the US measure of core inflation) came in at 4.3%. Maybe I’d take two pitchforks.
USD/JPY didn't do a lot in response, edging up ever so slightly just under 147.60. A bigger move came later when US yields held steadily higher. The 10-year hit 4.5%, its highest since 2007. You’ll remember 2007. Global Financial Crisis and all that …
JGB yields ticked lower ahead of the BoJ.
The USD rose a little also against the EUR and GBP. AUD, NZD, and CAD held steady to higher against the big dollar (as I update).
Other data today included flash PMIs from Australia and Japan, and trade balance data from New Zealand (see bullets above).
European Central Bank chief economist Lane gave a speech during the session, flagging that the transmission of ECB monetary policy to broader financing conditions and the real economy is firmly taking hold. If he is right it takes pressure off for still higher rates, at the margin.
The Australian LNG strike has been resolved. Unions and Chevron have reached agreement and industrial action will be halted.
The Yuan gained some ground on talk that some Chinese banks sold US dollars again. USD/CNH fell from highs circa 7.3160 to under 7.2970 as I post.
If you are reading this ahead of the Bank of Japan statement, previews are here:
- BOJ will not unwind easy policy at this week's meeting - poll
- BOJ statement due Friday: "Ueda could strike a hawkish chord"
- BOJ statement tomorrow - preview - "could probably send a subtle hawkish message "
- ANZ expect a subtle shift from the BOJ at this week's meeting - to less dovish
Asian equity markets mixed after the rout on Wall Street on Thursday:
Japan’s Nikkei 225 -0.7%
China’s Shanghai Composite +0.4%
Hong Kong’s Hang Seng +0.7%
South Korea’s KOSPI -0.3%
Australia’s S&P/ASX 200 -0.8%
USD/JPY heading towards the BOJ: