Tech gremlins ate the Americas timezone wrap, I’ve included the headlines from the session here below:
OK, back to the Asia session. Bank
of Japan monetary policy board member Naoki Tamura spoke and dropped this
into the conversation:
- Japan’s
inflation likely to slow for time being, then accelerate moderately
again - Can’t
rule out chance inflation may overshoot expectations
This
is a different tone than what we have heard from the Bank of Japan.
Over, and over, and over again Bank officials have said they expect
inflation to decline from around September/October 2023, this
addition of “then accelerate moderately again” from Tamura is
something new. I’m reading it as a (very) early sign the Bank is
assessing some reduction in its ultra-easy policy.
- “It’s
appropriate at this stage to sustain monetary easing, and earnestly
scrutinise wage and price developments,” Tamura said a speech to
business leaders. “But I’m hoping that around January through
March next year, we will have further clarity” on whether Japan
can sustainably meet the bank’s inflation target through wage and
price data available by then, he said.
Now,
don’t go betting the farm on the yen just yet, but the time is on
the horizon to be alert for some sort of move from the BoJ – Tamura
flagging Q1 2024. USD/JPY didn’t do a lot today. After dropping
back to lows under 145.75 it popped above 146 and remains above
146.20 as I update.
Also
from the timezone of interest today were July (month) inflation data
from Australia. At 4.9% y/y it came in well under the consensus
estimate of 5.2%. While the prospect of a September Reserve Bank of
Australia cash rate hike was small this result today locks in an ‘on
hold’ September decision (the meeting is on the 5th).
Monthly CPI data are not as complete as quarterly CPI data, so while
today’s data teases us that the RBA peak cash rate may have been
reached we await confirmation from Q3 CPI due on October 25, ahead of
the November 7 RBA meeting.
Early
in the session, late in the US afternoon really, were
privately-surveyed oil inventory data. These showed a much, much
larger oil stock drawdown than was expected. Distillate and Gasoline
stocks rose. For more, see bullets above.
Ranges
for major FX here were not large. AUD/USD dipped after the inflation
data, dragging NZD/USD with it. EUR, GBP, CAD are all a few tics down
against the USD also.
Asian
equity markets climbed to 2 weeks highs:
-
Japan’s Nikkei 225 +0.9%
-
China’s Shanghai Composite +0.1%
-
Hong Kong’s Hang Seng +0.6%
-
South Korea’s KOSPI +0.7%
-
Australia’s S&P/ASX 200 +1.3%
Bitcoin update after the Grayscale news hit during the US timezone: