The big news out of the Asian timezone today was the Bank of Japan intervention to sell USD/JPY. Estimates of the amount of selling ranged from USD30bn to USD50bn. The BoJ has to sell its foreign reserves of USD for such intervention. USD/JPY, and yen crosses, were smashed lower, with USD/JPY dropping 400 points from its high circa 149.70. The rebound was fierce also. As I update USD/JPY is not far from 149 again.

In other, way less notable, central bank news an RBA speaker, Assistant Governor Kent, repeated the message from the Bank that there are further interest rate rises ahead (November 1 is the next meeting). Kent also remarked on the falling AUD, saying that while the drop against the USD has been large the trade-weighted index fall is not nearly so great, saying its 'narrow and modest', and that this will mitigate the risk of imported inflation. We’ll see about that.

Chinese equity markets were slammed lower today. The Communist Party National Congress is over, the window-dressing propping up of the market took a breather.

Also from China we had Q3 GDP data (improved from Q2) and September economic activity data (retail sales slowed but industrial output improved). China GDP looks on track for around 3% this year but there are challenges in 2023 for the economy with the zero-COVID policy seemingly still entrenched, the slumping property sector, combined with the global economy slowing under the pressure of interest rate hikes.

US equity index futures opened strongly for the week but in the hours following gave back some of their gap-up gains. The Federal Reserve has headed into its quiet period (this began on Friday evening US time). Its probably no coincidence that signalling from the Fed heading into this was more supportive of asset prices.

usdyen 1 minute wrap chart 24 October 2022